The 2011-12 Indian Budget: Hit or Miss?
MUMBAI, March 4, 2011 - The Indian national budget was released two weeks ago, eliciting both praise and criticism. On the heels of massive scams within government departments (the 2G spectrum scam estimated at 1.7 trillion rupees, and the Commonwealth Games scam estimated at 80 billion rupees) and inflation woes, the government was keen to deliver a balanced and forward-looking budget.
Indian Finance Minister Pranab Mukherjee presented a budget with measures towards promoting infrastructure, inclusive development, boosting foreign investments, contending climate change, tackling corruption, and contending with black money.
Here are some fast facts on components of the 2011-2012 Indian Budget:
- Planned expenditure: 4.41 trillion rupees
- Tax revenue: 9.32 trillion rupees
- Non-tax revenue: 1.25 trillion rupees
- Fiscal deficit: 5.1% of GDP (down from 5.5%)
- Expected GDP growth rate: 9%, +/- 0.25%
- Education sector: 520.5 billion rupees
- Health sector: 267.6 billion rupees
- Social sector: 1.6 trillion rupees
- Defence sector: 1.6 trillion rupees
- Development of Jammu and Kashmir (a state with live separatist movements, also claimed by Pakistan): 80 billion rupees
- Generation of Unique Identification numbers: 1 million per day from October 1, 2011 (this is a recent government initiative to create a centralized identification system for all residents)
- Infrastructure: 2.14 trillion rupees
- Rural infrastructure development fund: 180 billion rupees (about 70% percent of India's population lives in rural areas)
- Tax Exemption limit: 180 thousand rupees (41% of Indians fell below the international poverty line in 2005 according to the World Bank, while the top 7 richest Indians account for 41% of the wealth, according to Forbes)
- Indian Railway Budget: 396 billion rupees (With over 64,015 kilometers of tracks representing the fourth largest railway network in the world, the Indian Railway is the country's largest employer,)
- New railway lines: 95.83 billion rupees
- Rise in Indian Railway fairs: 0 rupees (India's Railway Minister, Mamata Banerjee, has been accused of populism in her policies, pandering to her home state and states with upcoming elections. The India Railway has been criticized for their inefficiency and sizable losses)
- Credit flow for farmers: 4.75 trillion rupees (over 17,500 farmers in India are said to have commit suicide between 2002 and 2006, raising concern about their poverty and high levels of debt)
- Cold storage projects sanctioned: 24 (as much as 40 percent of India's fruit and vegetable production is wasted because of poor networks and a lack of cold storage facilities)
Between the large and fine print, the budget has made some happy, some discontent. Prices of hotel accommodation, flights, and health care in air-conditioned hospitals have gone up. Prices of mobile phone parts, incense sticks, and raw materials for syringes have gone down. Benefits to the elderly, farmers, and organic farmers have been noted. To non-financial experts, elements like a higher allocation for credit flow to farmers than for the defence budget look very promising. Both the Sensex and Nifty, indicating stock prices, rose in response to the budget release.
While the analysis continues, Indians hope that the budget serves to "transition towards a more transparent and result-oriented economic management system in India," as Minister Mukherjee said.