OPPORTUNITIES
* Swift and broad based growth in 2010-11 has put the economy back to its pre-crisis growth trajectory.
Fiscal consolidation has been impressive.
* Significant progress in critical institutional reforms that would set the pace for double-digit growth in the near future.
* Dynamism in the rural economy due to scaled up flow of resources to the rural areas.
CHALLENGES
* Structural concerns on inflation management to be addressed by improving supply response of agriculture to the expanding domestic demand and through stronger fiscal consolidation.
* Implementation gaps, leakages from public programmes and the quality of outcomes pose a serious challenge.
* Impression of drift in governance and gap in public accountability is misplaced.
* Corruption as a problem to be fought collectively. Government to improve the regulatory standards and administrative practices.
* Inputs from colleagues on both sides of House are important in the wider national interest.
* Budget 2011-12 to serve as a transition towards a more transparent and result oriented economic management system in India.
OVERVIEW OF THE ECONOMY
* Gross Domestic Product (GDP) estimated to have grown at 8.6 per cent in 2010-11 in real terms.
Economy has shown remarkable resilience
* Continued high food prices have been principal concern this year.
* Consumers denied the benefit of seasonal fall in prices despite improved availability of food items, revealing shortcomings in distribution and marketing systems.
* Monetary policy measures taken expected to further moderate inflation in coming months.
* Exports have grown by 29.4 per cent, while imports have recorded a growth of 17.6 per cent during
April to January 2010-11 over the corresponding period last year
* Indian economy expected to grow at 9 per cent with an outside band of +/- 0.25 per cent in 2011-12.
* Average inflation expected lower next year and current account deficit smaller.
SUSTAINING GROWTH
Fiscal consolidation
* Fiscal consolidation targets at Centre and States have shown positive effect on macro economic management of the economy.
* Amendment to Centre’s FRBM Act, 2003 laying down the fiscal road map for the next five years to be introduced in the course of the year.
* Proposal to introduce the Public Debt Management Agency of India Bill in the next financial year.
Tax Reforms
* Direct Taxes Code (DTC) to be finalised for enactment during 2011-12. DTC proposed to be effective from April 1, 2012.
* Areas of divergence with States on proposed Goods and Services Tax (GST) have been narrowed. As a step towards roll out of GST, Constitution Amendment Bill proposed to be introduced in this session of Parliament.
* Significant progress in establishing GST Network (GSTN), which will serve as IT infrastructure for introduction of GST.
Expenditure Reforms
* A Committee already set up by Planning Commission to look into the extant classification of public expenditure between plan, non-plan, revenue and capital.
Subsidies
* Nutrient Based Subsidy (NBS) has improved the availability of fertiliser; Government actively considering extension of the NBS regime to cover urea.
* Government to move towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilisers. Task force set up to work out the modalities for the proposed system.
People’s ownership of PSUs
* Overwhelming response to public issues of Central Public Sector Undertakings during current year.
* Higher than anticipated non-tax revenue has led to reschedulement of some disinvestment issues planned for current year.
* Rs. 40,000 crore to be raised through disinvestment in 2011-12.
* Government committed to retain at least 51 per cent ownership and management control of the Central Public Sector Undertakings.
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