Dear Friends:
In my previous story, I mentioned the addition of two more stories to India Ink (15 03 2012): Here's the second. -bhuban India’s Budget 2011: What Was Promised, What Was Delivered By NIKHILA GILL Courtesy Press Information Bureau, Government of India Finance Minister Pranab Mukherjee giving final touches to the federal budget 2011-12, in New Delhi, Feb. 27, 2011. Finance Minister Pranab Mukherjee made some lofty promises during his budget speech on Feb. 28, 2011. For the most part, the government has been unable to keep its word, in part owing to the inability to pass reform in Parliament, but also exacerbated by an economic slowdown and high oil and food prices. Here is a list of projections made in in the 2011 budget and how they have measured up over the year. Gross Domestic Product: The finance minister expected the economy to grow by 9 percent, plus or minus 0.25 percent in the fiscal year 2011-12. Mukesh Gupta/Reuters An iron chain link fence at a factory on the outskirts of Jammu. This estimate were revised down to 8.2 percent in last July, and further reduced to 7.1 percent by the prime minister’s Economic Advisory Council. The report by the council states the downward revisions are due to both the euro zone crisis and the uncertain domestic political environment, which have slowed the recovery in infrastructure investment. Additionally, industrial and investment activity declined in the second quarter of last year, further affecting growth. Inflation: The 2011 budget forecast inflation for the fiscal year at 5 percent. Inflation has stayed at around 10 percent for the 22 months preceding October 2011. The inflation rate dropped to 9.1 percent last November and fell further, to 7.5 percent in December and 6.5 percent in January before rising marginally to 6.95 percent in February, according to a report by the prime minister’s advisory council. The sustained inflationary pressure came mainly from high prices of cereals, vegetables, pulses and dairy products. Bikas Das/Associated Press A handful of Indian coins. Deficit: The finance minister projected the fiscal deficit at 4.6 percent. Analysts have revised this estimate to between 5.8 percent and 6.1 percent. AnHSBC report on India’s macroeconomic indicators pegs the deficit rate at 5.8 percent and says that the target of 4.8 percent for the fiscal year 2010 was achieved largely due to the one-off revenue collections from 3G license sales. According to bankNomura, the central government’s budget deficit will widen to 6.1 percent due to slower revenue growth and a higher subsidy bill. Subsidies: The central government projected its total subsidy bill at 1.44 trillion rupees ($28 billion) for 2011-12. Fertilizers make up about a third of the total of the government’s subsidy bill at 500 billion rupees ($1o billion) but judging by previous years’ records, where subsidy bills have been revised upwards, this year will be no different. According to the Fertilizer Association of India, the bill for the current fiscal is set to cross 700 billion rupees ($10.4 billion). The increased subsidy bill owes to a spike in international prices of inputs and fertilizer prices. Divyakant Solanki/European Pressphoto Agency A ration shop vendor makes an entry in a ration card, Pali village, Maharashtra. The central government budgeted 605 billion rupees ($12.1 billion) to fund food subsidies. As of last December, the government had released 451 billion rupees or about 75 percent of its budget allocation for the year toward food subsidies. This check is likely to increase by 50 percent over the next year if the Food Security Bill, which aims to provide legal entitlement to subsidized grain to 75 percent of rural and 50 percent of urban households, according to a report by The Financial Express. Petroleum subsidies were estimated at 236 billion rupees ($4.2 billion) for 2011-12. Nomura analysts predict that this bill will nearly triple and be billed at 600 billion rupees ($12 billion) owing to the volatility in oil prices worldwide. India imports about 70 percent of its total consumption of oil; Iran and Saudi Arabia are two of its largest suppliers. Education: The central government allocated 520 billion rupees ($10.4 billion) to the education sector for 2011-12. The accountability initiative by the Center for Policy Research finds that more than a year after the Right to Education Act was passed, although the government’s allocations to education have increased, these have not improved learning outcomes. The Sarva Shiksha Abhiyan, the government’s flagship elementary education program, accounts for 65 percent of the centre’s education budget. Of this, teachers received the largest portion of funding (44 percent covers salaries, teaching inputs and training) while children received only 10 percent, which covers uniforms, text books and bringing the unschooled into formal schooling. Overall, states are not spending their allocated budgets, with the average expenditure hovering at around 77 percent of budgeted allocations. Disinvestment: The central government targeted revenue of 400 billion rupees (approximately $8 billion) from reducing its stake in public sector companies. The government has only been able to achieve a fraction of its disinvestment target, earning 130 billion rupees ($2.6 billion) from broadband wireless auctions. The government decided against selling its shares of cash rich enterprises as this would have “reduced investible resources and failed to convince market participants,” who do not give much weight to proceeds from one-off asset sales, reports the prime minister’s advisory council. _______________________________________________ assam mailing list [email protected] http://assamnet.org/mailman/listinfo/assam_assamnet.org
