New Delhi: Finance Minister P Chidambaram on Friday presented a Budget which waived off loans worth Rs 60,000 crore to small farmers, hoped for an 8.8 percent growth and announced several social sector schemes.
Chidambaram, presenting the fifth and last full budget of the UPA government, allotted more funds on health and education.
He began his speech with concerns over inflation, which he blamed on domestic and global factors, and said the intention of his government was to make growth more inclusive with a focus on social sectors and agriculture.
"The economy is expected to grow by 8.7 percent," he said, referring to the growth for this fiscal projected by the Economic Survey tabled by him a day earlier. "But I personally think, the growth would be slightly higher at 8.8 percent."
Maintaining that keeping inflation under check was one of the “cornerstones” of the Government's policy, Chidambaram said the 11th Five Year Plan had begun on a robust note.
"Keeping inflation in check will be cornerstone of UPA government's policy," he said. "More can be done to improve inclusive growth," he said.
Best education for all
Chidambaram announced a 20 per cent hike in education budget—from Rs 28,674 crore to Rs 34,400 crore—and the setting up of more IITs and IIMs. Three new IITs will be set up in Andhra Pradesh, Bihar and Rajasthan.
Chidambaram also proposed setting up of national knowledge centres and allotted Rs 100 crore to the Information Technology sector.
“We must encourage our students to take up studies in science” and announced various scholarships for students pursuing the subject," he said
He also announced Rs 13,100 crore for Sarva Shiksha Abhiyan, Rs 8,000 crore for mid-day meal scheme and Rs 4,554 crore for secondary education scheme. With a clear emphasis on rural education, FM announced 410 additional Kasturba Gandhi Vidyalaya will be set up in backward blocks.
Axe the tax
Chidambaram announced major – and arguably populist - changes in the income tax slab. He said the threshold of exemption for all Income Tax assesses will be raised from Rs 1,10,000 to Rs 1,50,000, eliciting applause from the Parliamentarians. Personal income tax exemption slab for women will be at Rs 1.8 lakh.
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He also said every income tax assessee will get a relief of minimum of Rs 4,000. New tax slabs will be: 10 per cent for 1,50,000 to 3,00,000, 20 per cent for 3,00,000 to 5,00,000 and 30 per cent above 5,00,000. There will be no change in rate of surcharge, he said
Focus on farmers
The UPA government, under fire for the agrarian crisis in the country, has announced a massive debt relief for farmers.
Chidambaram said loans amounting to Rs 60,000 crore will be waived for marginal farmers owning land up to one hectare and small farmers owning land up to one and two hectares.
He said that the growth of just 2.6 percent expected this year in agriculture was disappointing and was responsible for the retardation of the overall expansion of the Indian economy, which was otherwise on a high growth trajectory.
Chidambaram said growth rate of agriculture was estimated at 2.6 per cent during the current year.
Chidambaram said the loan waiver scheme will benefit three crore small and medium farmers and cover loans totalling Rs 50,000 crore. One crore other farmers will benefit to the tune of Rs 10,000 crore in the waiver
He said Rs 20,000 crore will be allotted for irrigation projects under AIPB - an increase of Rs 9,000 crore over last year. He also said the National Horticulture Mission will be given Rs 1,100 crore in 2008-09 with special focus on coconut cultivation.
He also announced Rs 644 crore for National Agriculture Insurance Scheme, which will be continued pending evolving an alternative crop insurance scheme.
He also said National Plant Protection Training Institute at Hyderabad to be made autonomous body and Rs.29 crore will be allocated to it.
Agricultural loans given by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and due for December 31 that year will be covered under the waiver scheme to address the problem of indebtedness.
In keeping with the target of inclusive growth the NREGA scheme will be rolled out in all the 596 rural districts in the country in 2008-09.
Defence gets 10 per cent more funds
Chidambaram announced a 10 per cent increase in allocation for defence–the country’s biggest expenditure sector– from Rs 96,000 crore to Rs 1,05,600 crore. "I have assured the Defence Minister that more money would also be provided if necessary, especially for capital expenditure," he said.
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Senior citizens also found a significant mention in Chidambaram’s speech. A national programme for the elderly to be started at a cost of Rs 400 crore. He also announced centers for the elderly and health care centers for senior citizens.
The Jawaharlal Nehru Urban Renewal Mission will get Rs 6,865 crore this year against Rs 5,482 crore past year.
Minority welfare
He also announced a series of grants and allocation for the minority community. Announcing that the minority, SC, ST and minority students will continue to get special attention, Chidambaram announced allocation for Minority Affairs Ministry will be doubled from Rs 500 crore to Rs 1,000 crore.
He also announced Rs 540 crore for multi-sectoral development plan for minority concentration districts. 288 public sector bank branches will be opened in districts having minority community concentration, he said.
FM also announced Rs 230 crore will be extended as additional equity to developmental organisations looking after the welfare of SC, ST, socially and economically backward classes and minorities.
For the North-east
Chidambaram also said North-east states will continue to receive special attention. He announced Rs 500 crore for identifying urgent needs of development programmes of border areas like Arunachal Pradesh.
He also said allocation for several schemes in North-East has been raised from Rs 14,365 crore from last year to Rs 16,400 crore.
With a brown briefcase in hand with the Budget papers, he arrived at Parliament House a little after 10 am. from his North Block office, before proceeding for a meeting of the Union Cabinet presided over by Prime Minister Manmohan Singh.
His budget presentation was held up for a while when Opposition MPs began shouting slogans against the Government.
The Budget will be the Congress-led UPA government’s last opportunity to impress voters in a year in which seven states will got to polls.
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