Union Budget Review
Indian corporations that rarely ventured out of India suddenly started investing all over the world and even in some industrialized countries. The globalization of India has given rise to new opportunities but it has also brought with it new challenges and responsibilities. Every time there is a major financial crisis anywhere in the world, there is need to take brace position. And, in turn, the rise and fall of India’s growth rate has an impact on global growth and there is need for India to take this responsibility seriously.
The brewing trouble of Euro-zone Debt Crisis is posing a threat to global economical growth and seriously questioning the recovery strategies of various developng economies around the globe. APPROACH TO THE BUDGET For Indian economy, recovery was interrupted 2011-2012 year mainly due to intensification of debt crises in Euro zone, political turmoil in Middle East, rise in crude oil price and earthquake in Japan. GDP is estimated to grow by 6. 9 per cent in 2011-12, after having grown at 8. 4 per cent in preceding two years. India however remains front runner in economic growth in any cross-country comparison.
One side, the approach of the last rear budget was mainly to sustain the economic growth, on the flip side the monetary policy was tight and aimed at taming domestic inflationary pressure. Growth moderated and fiscal balance deteriorated due to tight monetary policy and expanded outlays. Indicators suggest that economy is turning around as core sectors and manufacturing show signs of recovery. At this juncture, for the 2012-2013 budget it is prudent to embrace hard decision to improve macroeconomic environment and strengthen domestic growth drivers.
If India can build on its economic strength, it can be a source of stability for world economy and a safe destination for restless global capital. “Effective Revenue Deficit” and “Medium Term Expenditure Framework” statement are two important features of amendment to FRBM Act in the direction of expenditure reforms. * Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets. This will help in reducing consumptive component of revenue deficit and create space for increased capital spending.
Some subsidies, while being inevitable, may become undesirable if they compromise the macroeconomic fundamentals of economy. Endeavour to scale up and roll out Aadhaar enabled payments for various government schemes to ensure that fruits of subsidy reach the needy sections Early Enactment of DTC Code. GST network to be set up as a National Information Utility and to become operational by August 2012.
At least 51 per cent ownership and management control to remain with Government.Proposal for FDI in multi-brand retail up to 51 per cent. * Various steps proposed to be taken for deepening the reforms in the Capital markets, including simplifying process of IPOs, allowing QFIs to access Indian Bond Market etc. * Various Legislative Reforms like The Pension Fund Regulatory and Development Authority Bill, The Banking Laws (Amendment) Bill and The Insurance Law (Amendment) Bill are initiated. More sectors added as eligible sectors for Viability Gap Funding under the scheme “Support to PPP in infrastructure”. * National Manufacturing Policy announced with the objective of raising, within a decade, the share of manufacturing in GDP to 25 per cent and creating of 10 crore jobs Transport: Roads and Civil Aviation * Direct import of Aviation Turbine Fuel permitted for Indian Carriers as actual users. * ECB to be permitted for working capital requirement of airline industry for a period of one year, subject to a total ceiling of US $ 1 billion.