Mag Budget

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Madam Speaker,
I rise to present the Union Budget for 2011-12.
We are reaching the end of a remarkable fiscal year. In a globalised world
with its share of uncertainties and rapid changes, this year brought us some
opportunities and many challenges as we moved ahead with steady steps on the
chosen path of fiscal consolidation and high economic growth.
2. Our growth in 2010-11 has been swift and broad-based. The economy is
back to its pre-crisis growth trajectory. While agriculture has shown a rebound,
industry is regaining its earlier momentum. Services sector continues its near
double digit run. Fiscal consolidation has been impressive. This year has also
seen significant progress in those critical institutional reforms that would set the
pace for double-digit growth in the near future.
3. While we succeeded in making good progress in addressing many areas
of our concern, we could have done better in some others. The total food inflation
declined from 20.2 per cent in February 2010 to less than half at 9.3 per cent in
January 2011, but it still remains a concern. In the medium term perspective, our
three priorities of sustaining a high growth trajectory; making development more
inclusive; and improving our institutions, public delivery and governance
practices, remain relevant. These would continue to engage the Indian policy-
planners for some time. However, there are some manifestations of these
challenges that need urgent attention in the short term.
4. Though we have regained the pre-crisis growth momentum, there is a
need to effect adjustments in the composition of growth on demand and supply
side. We have to ensure that along with private consumption, the revival in private
investment is sustained and matches pre-crisis growth rates at the earliest. This
requires a stronger fiscal consolidation to enlarge the resource space for private
Budget 2011-2012
Speech of
Pranab Mukherjee
Minister of Finance
February 28, 2011
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enterprise and addressing some policy constraints. We also have to improve the
supply response of agriculture to the expanding domestic demand. Determined
measures on both these issues will help address the structural concerns on inflation
management. It will also ensure a more stable macroeconomic environment for
continued high growth.
5. The UPA Government has significantly scaled up the flow of resources
to rural areas to give a more inclusive thrust to the development process. The
impact is visible in the new dynamism of our rural economy. It has helped
India navigate itself rapidly out of the quagmire of global economic slowdown.
Yet, there is much that still needs to be done, especially in rural India. We have
to reconcile legitimate environmental concerns with necessary developmental
needs. Above all, there is the 'challenge of growing aspiration' of a young
India.
6. To address these concerns, I do not foresee resources being a major constraint,
at least not in the medium-term. However, the implementation gaps, leakages from
public programmes and the quality of our outcomes are a serious challenge.
7. Certain events in the past few months may have created an impression of
drift in governance and a gap in public accountability. Even as the Government
is engaged in addressing specific concerns emanating from some of these events
in the larger public interest and in upholding the rule of law, such an impression
is misplaced. We have to seize in these developments, the opportunity to improve
our regulatory standards and administrative practices. Corruption is a problem
that we have to fight collectively.
8. In a complex and rapidly evolving economy, the Government can not profess
to be the sole repository of all knowledge. Indeed, in a democratic polity, it stands
to benefit from inputs from colleagues on both sides of the House. They must lend
their voice and expertise to influence public policy in the wider national interest.
In some areas, good results depend on coordinated efforts of the Centre and the
State Governments and in some others, on favourable external developments.
9. I see the Budget for 2011-12 as a transition towards a more transparent
and result oriented economic management system in India. We are taking major
steps in simplifying and placing the administrative procedures concerning
taxation, trade and tariffs and social transfers on electronic interface, free of
discretion and bureaucratic delays. This will set the tone for a newer, vibrant and
more efficient economy.
10. At times the biggest reforms are not the ones that make headline, but the
ones concerned with the details of governance, which affect the everyday life of
aam aadmi. In preparing this year's Budget, I have been deeply conscious of this
fact. I am grateful for the able guidance of the Honble Prime Minister and the
strong support lent by UPA Chairperson Smt. Sonia Gandhi in my endeavour. I
would now begin with a brief overview of the economy.
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I. Overview of the Economy
11. On last Friday, I laid on the table of the House the Economic Survey
2010-11, which gives a detailed analysis of the economic situation of the country
over the past 12 months. The Gross Domestic Product (GDP) of India is estimated
to have grown at 8.6 per cent in 2010-11 in real terms. In 2010-11 agriculture is
estimated to have grown at 5.4 per cent, industry at 8.1 per cent and services at
9.6 per cent. All three sectors are contributing to the consolidation of growth.
More importantly, the economy has shown remarkable resilience to both external
and domestic shocks.
12. Our principal concern this year has been the continued high food prices.
Inflation surfaced in two distinct episodes. At the beginning of the year, food
inflation was high for some cereals, sugar and pulses. Towards the second half,
while prices of these items moderated and even recorded negative rates of
inflation, there was spurt in prices of onion, milk, poultry and some vegetables.
Of late prices of onion have crashed in wholesale markets and we have had to
remove the ban on their exports.
13. Despite improvement in the availability of most food items, consumers
were denied the benefit of seasonal fall in prices normally seen in winter months.
These developments revealed shortcomings in distribution and marketing systems,
which are getting accentuated due to growing demand for these food items with
rising income levels. The huge differences between wholesale and retail prices
and between markets in different parts of the country are just not acceptable.
These are at the expense of remunerative prices for farmers and competitive
prices for consumers.
14. Monetary policy stance in 2010-11, while being supportive of fiscal policy,
has succeeded in keeping core-inflation in check. As the transmission lag in
monetary policy tends to be long, I expect the measures already taken by the RBI
to further moderate inflation in coming months.
15. The developments on India's external sector in the current year have been
encouraging. Even as the recovery in developed countries is gradually taking
root, our trade performance has improved. Exports have grown at 29.4 per cent
to reach US Dollar 184.6 billion, while imports at US Dollar 273.6 billion have
recorded a growth of 17.6 per cent during April-January 2010-11, over the
corresponding period last year. The current account deficit is around the
2009-10 level and poses some concerns because of the composition of its
financing.
16. Policy making in a globalised world has to take into account the likely
international developments. To realise the desired outcomes, it is important that
there is convergence in expectations of our investors, entrepreneurs and consumers
on the macroeconomic prospects of the economy. Against this backdrop, the
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Indian economy is expected to grow at 9 per cent with an outside band of +/-
0.25 per cent in 2011-12. I expect the average inflation to be lower next year and
the current account deficit smaller and better managed with higher domestic
savings rate and stable capital flows. While, like last year, I seek the blessings of
Lord Indra to bestow on us timely and bountiful monsoons, I would pray to
Goddess Lakshmi as well. I think it is a good strategy to diversify one's risks.
II. Sustaining Growth
17. In my last Budget, I had started rolling back the fiscal stimulus
implemented over 2008-09 and 2009-10 to mitigate the impact of the global
financial crisis on economic slowdown in India. In the course of the year, I have
moved further on that path. I believe that a part of the current recovery must be
stored away to build future resilience. Indeed, a counter cyclical fiscal policy is
our best insurance against external shocks and localised domestic factors.
Fiscal Consolidation
18. The experience with Fiscal Responsibility and Budget Management Act,
2003 (FRBM Act) at Centre and the corresponding Acts at State level show that
statutory fiscal consolidation targets have a positive effect on macroeconomic
management of the economy. In the course of the year the Central Government
would introduce an amendment to the FRBM Act, laying down the fiscal road
map for the next five years.
19. The Thirteenth Finance Commission has worked out a fiscal consolidation
road map for States requiring them to eliminate revenue deficit and achieve a
fiscal deficit of 3 per cent of their respective Gross State Domestic Product latest
by 2014-15. It has also recommended a combined States debt target of 24.3 per
cent of GDP to be reached during this period. The States are required to amend
or enact their FRBM Acts to conform to these recommendations.
20. The Government has been in the process of setting-up an independent
Debt Management Office in the Finance Ministry. A Middle Office is already
operational. As a next step, I propose to introduce the Public Debt Management
Agency of India Bill in the next financial year.
Tax Reforms
21. The introduction of the Direct Taxes Code (DTC) and the proposed Goods
and Services Tax (GST) will mark a watershed. These reforms will result in
moderation of rates, simplification of laws and better compliance.
22. As Hon'ble Members are aware, the Direct Taxes Code Bill was introduced
in Parliament in August, 2010. After receiving the report of the Standing
Committee, we shall be able to finalise the Code for its enactment during
2011-12. This has been a pioneering effort in participative legislation. The Code
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is proposed to be effective from April 1, 2012 to allow taxpayers, practitioners
and administrators to fully understand the legislation and adjust to the revised
procedures.
23. Unlike DTC, decisions on the GST have to be taken in concert with the
States with whom our dialogue has made considerable progress in the last four
years. Areas of divergence have been narrowed. As a step towards the roll-out of
GST, I propose to introduce the Constitution Amendment Bill in this session of
Parliament. Work is also underway on drafting of the model legislation for the
Central and State GST.
24. Among the other steps that are being taken for the introduction of GST is
the establishment of a strong IT infrastructure. We have made significant progress
on the GST Network (GSTN). The key business processes of registration, returns
and payments are in advanced stages of finalisation. The National Securities
Depository Limited (NSDL) has been selected as technology partner for
incubating the National Information Utility that will establish and operate the IT
backbone for GST. By June 2011, NSDL will set up a Pilot portal in collaboration
with eleven States prior to its roll out across the country.
Expenditure Reforms
25. The effective management of public expenditure is an integral part of the
fiscal consolidation process. Expenditure has to be oriented towards the
production of public goods and services. The extant classification of public
expenditure between plan, non-plan, revenue and capital spending needs to be
revisited. This is necessary as one recognises the importance of service sector
and the knowledge economy for our development. A Committee under
Dr. C. Rangarajan has been set up by the Planning Commission to look into
these issues.
Subsidies
26. During the year 2010-11, the Nutrient Based Subsidy (NBS) policy was
successfully implemented for all fertilisers except urea. The policy has been
well received by all stakeholders, and the availability of fertilisers has improved.
The extension of the NBS regime to cover urea is under active consideration of
the Government.
27. The Government provides subsidies, notably on fuel and food grains, to
enable the common man to have access to these basic necessities at affordable
prices. A significant proportion of subsidised fuel does not reach the targeted
beneficiaries and there is large scale diversion of subsidised kerosene oil. A recent
tragic event has highlighted this practice. We have deliberated for long the
modalities of implementing such subsidies. The debate now has to make way for
decision. To ensure greater efficiency, cost effectiveness and better delivery for
both kerosene and fertilisers, the Government will move towards direct transfer
of cash subsidy to people living below poverty line in a phased manner.
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28. A task force headed by Shri Nandan Nilekani has been set-up to work
out the modalities for the proposed system of direct transfer of subsidy for
kerosene, LPG and fertilisers. The interim report of the task force is expected by
June 2011. The system will be in place by March 2012.
Peoples Ownership of PSUs
29. The Government's programme to broadbase the ownership of Central
Public Sector Undertakings (CPSUs) has received an overwhelming response.
The six public issues of CPSUs in the current financial year have attracted around
50 lakh retail investors.
30. As against a target of `40,000 crore, the Government will raise about
`22,144 crore from disinvestment in 2010-11. A higher than anticipated realisation
in non-tax revenues has led us to reschedule some of the divestment issues planned
for the current year. I intend to maintain the momentum on disinvestment in
2011-12 by raising `40,000 crore. Let me reiterate here that the Government is
committed to retain at least 51 per cent ownership and management control of the
CPSUs, as stated earlier in my Budget speech for 2009-10.
Investment Environment
Foreign Direct Investment
31. To make the FDI policy more user-friendly, all prior regulations and
guidelines have been consolidated into one comprehensive document, which is
reviewed every six months. The last review has been released in September
2010. This has been done with the specific intent of enhancing clarity and
predictability of our FDI policy to foreign investors. Discussions are underway
to further liberalise the FDI policy.
Foreign Institutional Investors
32. Currently, only FIIs and sub-accounts registered with the SEBI and NRIs
are allowed to invest in mutual fund schemes. To liberalise the portfolio
investment route, it has been decided to permit SEBI registered Mutual Funds
to accept subscriptions from foreign investors who meet the KYC requirements
for equity schemes. This would enable Indian Mutual Funds to have direct
access to foreign investors and widen the class of foreign investors in Indian
equity market.
33. To enhance the flow of funds to the infrastructure sector, the FII limit for
investment in corporate bonds, with residual maturity of over five years issued
by companies in infrastructure sector, is being raised by an additional limit of
US Dollar 20 billion taking the limit to US Dollar 25 billion. This will raise the
total limit available to the FIIs for investment in corporate bonds to US Dollar
40 billion. Since most of the infrastructure companies are organised in the form
of SPVs, FIIs would also be permitted to invest in unlisted bonds with a minimum
lock-in period of three years. However, the FIIs will be allowed to trade amongst
themselves during the lock-in period.
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Financial Sector legislative Initiatives
34. The financial sector reforms initiated during the early 1990s have borne
good results for the Indian economy. The UPA Government is committed to
take this process further. Accordingly, I propose to move the following legislations
in the financial sector:
(i) The Insurance Laws (Amendment) Bill, 2008;
(ii) The Life Insurance Corporation (Amendment) Bill, 2009;
(iii) The revised Pension Fund Regulatory and Development Authority
Bill, first introduced in 2005;
(iv) Banking Laws Amendment Bill, 2011;
(v) Bill on Factoring and Assignment of Receivables;
(vi) The State Bank of India (Subsidiary Banks Laws) Amendment Bill,
2009; and
(vii) Bill to amend RDBFI Act 1993 and SARFAESI Act 2002.
35. In my last Budget speech, I had announced that Reserve Bank of India
would consider giving some additional banking licences to private sector players.
Accordingly, RBI issued a discussion paper in August, 2010, inviting feedback
from the public. RBI has proposed some amendments in the Banking Regulation
Act. I propose to bring suitable legislative amendments in this regard in this
session. RBI is planning to issue the guidelines for banking licences before the
close of this financial year.
Public Sector Bank Recapitalisation
36. During the year 2010-11, the Government is providing a sum of `20,157
crore for infusion in the Public Sector Banks to maintain Tier I Capital to Risk
Weighted Asset Ratio (CRAR) at 8 per cent and increase government equity in some
banks to 58 per cent. I propose to provide a sum of `6,000 crore for the year 2011-12
to enable Public Sector Banks to maintain a minimum Tier I CRAR at 8 per cent.
Recapitalisation of Regional Rural Banks
37. As a part of financial strengthening of Regional Rural Banks, an amount
of `350 crore was given to these banks during this year. I propose to provide
`500 crore during 2011-12 to enable them maintain a CRAR of at least 9 per
cent as on March 31, 2012.
Micro Finance Institutions
38. The Micro Finance Institutions (MFIs) have emerged as an important
means of financial inclusion. Creation of a dedicated fund for providing equity
to smaller MFIs would help them maintain growth and achieve scale and
efficiency in operations. I propose to create in the course of the year, "India
Microfinance Equity Fund" of `100 crore with SIDBI. To empower women and
promote their Self Help Groups (SHGs), I propose to create a Womens SHGs
Development Fund with a corpus of `500 crore. The Committee set up by RBI
to look into issues relating to micro finance sector in India has submitted its
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report. The Government is considering putting in place appropriate framework
to protect the interests of small borrowers.
Rural Infrastructure Development Fund
39. The Rural Infrastructure Development Fund (RIDF) is an important
instrument for routing bank funds for financing rural infrastructure. This is popular
among State Governments. I propose to raise the corpus of RIDF XVII to `18,000
crore in 2011-12 from `16,000 crore in the current year. The additional allocation
would be dedicated to creation of warehousing facilities.
Micro, Small and Medium Enterprises
40. Micro and Small enterprises play a crucial role in furthering the objective
of equitable and inclusive growth. Last year, `4,000 crore was provided to SIDBI
for refinancing incremental lending by banks to these enterprises. For the year
2011-12, I propose to provide `5,000 crore to SIDBI for the same purpose out of
the shortfall of banks on priority sector lending targets.
41. Handloom weavers have been facing economic stress. Consequently,
many of them have not been able to repay debts to handloom weaver cooperative
societies which have become financially unviable. I propose to provide `3,000
crore to NABARD, in phases for these cooperative societies. The initiative would
benefit 15,000 cooperative societies and about 3 lakh handloom weavers. The
details of the scheme would be worked out by the Ministry of Textiles in
consultation with Planning Commission.
42. I am happy to report that the outstanding loans to minority communities
which stood at 13 per cent of total priority sector lending at the end of last year
have increased to 13.6 per cent in the current year. I have directed the Public
Sector Banks to achieve the target of 15 per cent at the earliest.
Housing Sector Finance
43. To further stimulate growth in housing sector, I am liberalising the existing
scheme of interest subvention of 1 per cent on housing loans by extending it to
housing loan upto `15 lakh where the cost of the house does not exceed `25 lakh
from the present limit of `10 lakh and `20 lakh respectively.
44. On account of increase in prices of residential properties in urban areas,
I propose to enhance the existing housing loan limit from `20 lakh to `25 lakh
for dwelling units under priority sector lending.
45. To provide housing finance to targeted groups in rural areas at competitive
rates, I propose to enhance the provision under Rural Housing Fund to `3,000
crore from the existing `2,000 crore.
46. Credit enablement of Economically Weaker Sections (EWS) and LIG
households is a serious challenge. To address this issue, I propose to create a
Mortgage Risk Guarantee Fund under Rajiv Awas Yojana. This would guarantee
housing loans taken by EWS and LIG households and enhance their credit
worthiness.
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47. To prevent frauds in loan cases involving multiple lending from different
banks on the same immovable property, the Government has facilitated setting
up of Central Electronic Registry under the SARFAESI Act, 2002. This Registry
will become operational by March 31, 2011.
Financial Sector Legislative Reforms Commission
48. In pursuance of the announcement made in Budget 2010-11, the
Government has set up a Financial Sector Legislative Reforms Commission under
the Chair of Justice B. N. Srikrishna. It would rewrite and streamline the financial
sector laws, rules and regulations and bring them in harmony with the
requirements of a modern financial sector. The Commission will complete its
work in 24 months.
49. The Companies Bill introduced in the Parliament in 2009 has been
received from the Parliamentary Standing Committee. The proposed bill will be
introduced in the Lok Sabha in the current session.
Agriculture
50. Agriculture development is central to our growth strategy. Measures taken
during the current year have started attracting private investment in agriculture
and agro-processing activities. This process has to be deepened further.
51. In the Budget for 2010-11, I had delineated a four-pronged strategy
covering agricultural production, reduction in wastage of produce, credit support
to farmers and a thrust to the food processing sector. These initiatives have
started showing results but there are other issues in our food economy that require
attention. The recent spurt in food prices was driven by increase in the prices of
items like fruits and vegetables, milk, meat, poultry and fish, which account for
more than 70 per cent of the WPI basket for primary food items. Removal of
production and distribution bottlenecks for these items will be the focus of my
attention this year. I propose to make allocations for these schemes under the
ongoing Rashtriya Krishi Vikas Yojana (RKVY) for an early take off. The total
allocation of RKVY is being increased from `6,755 crore in 2010-11 to `7,860
crore in 2011-12.
Bringing Green Revolution to Eastern Region
52. The Green Revolution in Eastern Region is waiting to happen. To realize
the potential of the region, last year's initiative will be continued in 2011-12 with
a further allocation of `400 crore. The program would target the improvement in
the rice based cropping system of Assam, West Bengal, Orissa, Bihar, Jharkhand,
Eastern Uttar Pradesh and Chhattisgarh.
Integrated Development of 60,000 pulses villages in rainfed areas
53. Government's initiative on pulses has received a positive response from
the farmers. As per the second advance estimates, a record production of 165
lakh tonnes of pulses is expected this year as against 147 lakh tonnes last year.
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While consolidating these gains, we must strive to attain self-sufficiency in
production of pulses within next three years. I propose to provide an amount of
`300 crore to promote 60,000 pulses villages in rainfed areas for increasing crop
productivity and strengthening market linkages.
Promotion of Oil Palm
54. The domestic production of edible oil meets only about 50 per cent
demand. The gap in supply is met through imports, which are often at high
prices due to the quantum of our requirement. Our recent interventions and
good rains are expected to result in a higher oilseeds production of 278 lakh
tonnes in 2010-11 as against 249 lakh tonnes in 2009-10. To achieve a major
breakthrough, we have to pay special attention to oil palm as it is one of the
most efficient oil crops. I propose to provide an amount of `300 crore to bring
60,000 hectares under oil palm plantation, by integrating the farmers with the
markets. The initiative will yield about 3 lakh metric tonnes of palm oil annually
in 5 years.
Initiative on Vegetable Clusters
55. The growing demand for vegetables has to be met by a robust increase
in the productivity and market linkage. An efficient supply chain, to provide
quality vegetables at competitive prices will have to be established. I propose to
provide an amount of `300 crore for implementation of vegetable initiative to
set in motion a virtuous cycle of higher production and incomes for the farmers.
To begin with, this programme will be launched near major urban centres.
Nutri-cereals
56. While we ensure food for all, we must also promote balanced nutrition.
Bajra, jowar, ragi and other millets are highly nutritious and are known to possess
several medicinal properties. The availability and consumption of these Nutri-
cereals is, however, low and has been steadily declining over recent years. A
provision of `300 crore is being made to promote higher production of these
cereals, upgrade their processing technologies and create awareness regarding
their health benefits. This initiative would provide market linked production
support to ten lakh millet farmers in the arid and semi-arid regions of the country.
The programme would be taken up in 1000 compact blocks covering about 25,000
villages. This will help improve nutritional security and increase feed and fodder
supply for livestock.
National Mission for Protein Supplements
57. The consumption of foods rich in animal protein and other nutrients has
risen of late, with demand growing faster than production. The National Mission
for Protein Supplements is being launched in 2011-12 with an allocation of `300
crore. It will take up activities to promote animal based protein production through
livestock development, dairy farming, piggery, goat rearing and fisheries in
selected blocks.
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Accelerated Fodder Development Programme
58. Adequate availability of fodder is essential for sustained production of
milk. It is necessary to accelerate the production of fodder through intensive
promotion of technologies to ensure its availability throughout the year. I
propose to provide `300 crore for Accelerated Fodder Development Programme
which will benefit farmers in 25,000 villages.
59. Hon'ble Members may be curious as to why all these new initiatives
are being launched with an allocation of `300 crore. Well, the number 3 happens
to be my lucky number !
National Mission for Sustainable Agriculture
60. While the need to maximize crop yields to meet the growing demand
for food grains is critical, we have to sustain agricultural productivity in the
long run. There has been deterioration in soil health due to removal of crop
residues and indiscriminate use of chemical fertilizers, aided by distorted prices.
61. To address these issues, the Government proposes to promote organic
farming methods, combining modern technology with traditional farming
practices like green manuring, biological pest control and weed management.
Agriculture Credit
62. To get the best from their land, farmers need access to affordable credit.
Banks have been consistently meeting the targets set for agriculture credit flow
in the past few years. For the year 2011-12, I am raising the target of credit
flow to the farmers from `3,75,000 crore this year to `4,75,000 crore in 2011-
12. Banks have been asked to step up direct lending for agriculture and credit
to small and marginal farmers.
63. The existing interest subvention scheme of providing short term crop
loans to farmers at 7 per cent interest will be continued during 2011-12. In the
last budget, I had provided an additional 2 per cent interest subvention to those
farmers who repay their crop loans on time. The response to this scheme has
been good. In order to provide further incentive to these farmers, I propose to
enhance the additional subvention to 3 per cent in 2011-12. Thus, the effective
rate of interest for such farmers will be 4 per cent per annum.
64. In view of the enhanced target for flow of agriculture credit, I propose
to strengthen NABARD's capital base by infusing `3000 crore, in a phased
manner, as Government equity. This would raise its paid-up capital to `5,000
crore. To enable NABARD refinance the short-term crop loans of the
cooperative credit institutions and RRBs at concessional rates, I propose a
contribution of `10,000 crore to NABARDs Short-term Rural Credit Fund for
2011-12 from the shortfall in priority sector lending by Scheduled Commercial
Banks.
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Mega Food Parks
65. Despite growing production of vegetables and fruits, their availability is
inadequate due to bottlenecks in retailing capacity. An estimated 40 per cent of
the fruit and vegetable production in India goes waste due to lack of storage,
cold chain and transport infrastructure. To address these issues, the Eleventh
Plan target for number of Mega Food Parks was set at 30. So far, 15 such parks
have been sanctioned. During 2011-12, approval is being given to set up 15
more Mega Food Parks.
Storage Capacity and Cold Chains
66. The years 2008 to 2010 saw very high levels of foodgrain procurement.
On January 1, 2011, the foodgrain stock in Central pool reached 470 lakh metric
tonnes, 2.7 times higher than 174 lakh metric tonnes on January 1, 2007. The
storage capacity for such large quantities requires augmentation. Process to create
new storage capacity of 150 lakh metric tonnes through private entrepreneurs
and warehousing corporations has been fast tracked. Decision to create 20 lakh
metric tonnes of storage capacity under Public Entrepreneurs Guarantee (PEG)
Scheme through modern silos has been taken. While we will be able to add
about 2.6 lakh tonnes of capacity by March 2011, based on existing sanctions,
the addition will reach 40 lakh tonnes by March 2012. During 2010-11, another
24 lakh metric tonnes of storage capacity has been created under the Rural
Godown Scheme.
67. Investment in cold storage projects is now gaining momentum. During
this year, 24 cold storage projects with a capacity of 1.4 lakh metric tonnes have
been sanctioned under National Horticulture Mission. In addition, 107 cold
storage projects with a capacity of over 5 lakh metric tonnes have been approved
by the National Horticulture Board.
68. To attract investment in this sector, henceforth, capital investment in the
creation of modern storage capacity will be eligible for viability gap funding
scheme of the Finance Ministry. It is also proposed to recognize cold chains and
post-harvest storage as an infrastructure sub-sector.
Agriculture Produce Marketing Act
69. The recent episode of inflation in vegetables and fruits has exposed serious
flaws in our supply chains. The government regulated mandis sometimes prevent
retailers from integrating their enterprises with the farmers. There is need for the
State Governments to review and enforce a reformed Agriculture Produce
Marketing Act urgently.
Infrastructure and Industry
70. Infrastructure is critical for our development. For 2011-12, an allocation
of over ` 2,14,000 crore is being made for this sector, which is 23.3 per cent
higher than current year. This amounts to 48.5 per cent of the Gross Budgetary
Support to plan expenditure.
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71. Our experience with PPP model for creation of public sector assets in the
country has been good. We have recently launched the National Capacity Building
Programme to enhance capacities of public functionaries in identifying,
conceptualising, structuring and managing PPPs. It is our endeavour to come up
with a comprehensive policy that can be used by the Centre and the State
Governments in further developing public-private partnerships.
72. Government established India Infrastructure Finance Company Limited
(IIFCL) to provide long term financial assistance to infrastructure projects. It is
expected to achieve a cumulative disbursement target of `20,000 crore by March
31, 2011 and `25,000 crore by March 31, 2012. The take out financing scheme
announced in the Budget 2009-10 has been implemented and seven projects
have been sanctioned with a debt of `1,500 crore. Another `5,000 crore will be
sanctioned during 2011-12.
73. In order to give a boost to infrastructure development in railways, ports,
housing and highways development, I propose to allow tax free bonds of `30,000
crore to be issued by various Government undertakings in the year 2011-12.
This includes Indian Railway Finance Corporation `10,000 crore, National
Highway Authority of India `10,000 crore, HUDCO `5,000 crore and Ports `5,000
crore.
74. To attract foreign funds for the infrastructure financing, I propose to create
Special Vehicles in the form of notified infrastructure debt funds. I will come to
the details in Part B of my speech.
National Manufacturing Policy
75. For sustained growth of GDP and productive employment for younger
generation, it is imperative that the growth in manufacturing sector picks up. We
expect to take the share of manufacturing in GDP from about 16 per cent to 25
per cent over a period of ten years. Government will come out with a
manufacturing policy, which will bring down the compliance burden on the
industry through self-regulation and help make Indian industry globally
competitive.
76. To address the need for greater transparency and accountability in
procurement policy and allocation, pricing and utilisation of natural resources,
the Government has set up two committees. The recommendations will be
available within three months.
77. A Group of Ministers has been set up to consider all issues relating to
reconciliation of environmental concerns emanating from various departmental
activities including those related to infrastructure and mining. This Group will
also suggest changes in the existing statutes, rules, regulations and guidelines
and make its recommendations in a time bound manner.
78. The Indian automobile market is the second fastest growing in the world
and has shown nearly 30 per cent growth this year. World over, substantial
14
investments are being made in the field of hybrid and electric mobility. To provide
green and clean transportation for the masses, National Mission for Hybrid and
Electric Vehicles will be launched in collaboration with all stakeholders.
79. The funding of 15,260 modern low floor and semi-low floor buses under
JNNURM, besides adding to passenger comfort, has transformed the urban
transport across India. In 2011-12, Delhi Metro Phase-III and Mumbai Metro
Line III are proposed to be taken up. The ongoing Metro projects of Bengaluru,
Kolkata and Chennai will be provided financial assistance for speedy
implementation.
80. Investment in fertilizer sector is capital intensive and is considered high
risk. It is proposed to include capital investment in fertiliser production as an
infrastructure sub-sector.
Exports
81. The Task Force on Transactions Cost set up by the Department of
Commerce to identify and suggest ways to achieve improvement in efficiency of
our export processes, has completed its work. Twenty one suggestions made by
the Task Force have already been implemented. Action on remaining two will be
taken in next few months. This will mitigate transactions cost by about `2,100
crore.
82. To quicken the clearance of the cargo by Customs authorities and further
modernise the Customs administration, I propose to introduce self-assessment
in Customs. Under this, importers and exporters will themselves assess their
duty liabilities while filing their declarations in the EDI system. The Department
will verify such assessments on a selective system driven basis.
83. There have been considerable difficulties in the sanction of refunds
relating to tax paid on services used for export of goods. I propose to shortly
introduce a scheme for the refund of these taxes on the lines of drawback of
duties in a far more simplified and expeditious manner. A new scheme is also
being introduced by which units in SEZs will be able to obtain tax-free receipt of
services wholly consumed within the zone and get their refunds in a much easier
manner.
84. Mega clusters have large employment and export potential. I propose to
extend the Mega Cluster Scheme for development of leather products. Seven
mega leather clusters would be set up during the year 2011-12. I also propose to
include Jodhpur for the development of a handicraft mega cluster.
Black Money
85. The generation and circulation of black money is an area of serious
concern. To deal with this problem effectively, Government has put into operation
15
a five-fold strategy which consists of Joining the global crusade against 'black
money'; Creating an appropriate legislative framework; Setting up institutions
for dealing with illicit funds; Developing systems for implementation; and
Imparting skills to the manpower for effective action.
86. We secured Membership of the Financial Action Task Force (FATF) in
June last year. This is an important initiative of G-20 for anti-money laundering.
We have also joined the Task Force on Financial Integrity and Economic
Development, Eurasian Group (EAG) and Global Forum on Transparency and
Exchange of Information for Tax Purposes.
87. During the year, we have concluded discussions for 11 Tax Information
Exchange Agreements (TIEAs) and 13 new Double Taxation Avoidance
Agreements (DTAAs) along with revision of provisions of 10 existing DTAAs.
To effectively handle the increase in tax information exchange and transfer
pricing issues, Foreign Tax Division of CBDT has been strengthened. A
dedicated Cell for exchange of information is being set up to work on this
agenda.
88. The amendment in our Money Laundering Legislation in 2009 has
significantly increased its scope and application. The number of cases registered
under this law has increased from 50 between 2005 to 2008 to over 1200 by
January this year. The strength of the Enforcement Directorate has been increased
three-fold to deal effectively with the increased workload.
89. The Ministry of Finance has commissioned a study on unaccounted
income and wealth held within and outside our country. It would suggest methods
to tax and repatriate this illicit money.
90. Trafficking in narcotic drugs is also a contributor to the generation of
black money. To strengthen controls over prevention of trafficking and improve
the management of narcotic drugs and psychotropic substances, I propose to
announce a comprehensive national policy in the near future.
III. Strengthening Inclusion
91. The UPA Government has engineered a major directional change in public
policy by its focus on inclusive development. Creation of legal entitlements for
an individual's right to work has added to resilience and dynamism in our rural
economy. The right to information and the right to education are effective tools
of empowerment for removing social imbalances. The country has carried for
long enough the burden of hunger and malnutrition. After detailed consultations
with all stakeholders including State Governments, we are close to the finalisation
of National Food Security Bill (NFSB) which will be introduced in the Parliament
during the course of this year. The proposed allocation of ` 1,60,887 crore for
social sector in 2011-12 is an increase of 17 per cent over current year. It amounts
to 36.4 per cent of the total plan allocation.
16
Bharat Nirman
92. The UPA Government's flagship programmes have been the principal
instrument for implementing its agenda for inclusive development. For the
year 2011-12, Bharat Nirman, which includes Pradhan Mantri Gram Sadak
Yojna (PMGSY), Accelerated Irrigation Benefit Programme, Rajiv Gandhi
Grameen Vidyutikaran Yojna, Indira Awas Yojna, National Rural Drinking
Water Programme and Rural telephony have together been allocated `58,000
crore. This is an increase of `10,000 crore from the current year. A plan has
been finalised to provide Rural Broadband Connectivity to all 2,50,000
Panchayats in the country in three years.
MGNREGA
93. In pursuance of my earlier budget announcement to provide a real wage
of `100 per day, the Government has decided to index the wage rates notified
under the MGNREGA to the Consumer Price Index for Agricultural Labour.
The enhanced wage rates have been notified by the Ministry of Rural
Development on January 14, 2011. It has resulted in significant enhancement
of wages for the beneficiaries across the country.
94. The Anganwadi workers and Anganwadi helpers are the backbone of
Integrated Child Development Services Scheme. I am happy to announce an
increase in the remuneration of Anganwadi workers from `1,500 per month to
`3,000 per month and for Anganwadi helpers from `750 per month to `1,500
per month. This will be effective from April 1, 2011. Around 22 lakh Anganwadi
workers and helpers will benefit from the increase.
Scheduled Castes and Tribal Sub-plan
95. In the Budget for 2011-12, for the first time, specific allocations are
being earmarked towards Scheduled Castes Sub-plan and Tribal Sub-plan.
These will be shown in the Budget of the relevant Ministries and Departments
under separate minor heads of account. Further, I propose to increase the Budget
allocation for primitive tribal groups from `185 crore in 2010-11 to `244 crore
in 2011-12.
Education
96. Our demographic dividend of a relatively younger population
compared to developed countries is as much of an opportunity as it is a
challenge. Over 70 per cent of Indians will be of working age in 2025. In this
context, universalising access to secondary education, increasing the percentage
of our scholars in higher education and providing skill training is necessary.
For education, I propose an allocation of ` 52,057 crore, which is an increase
of 24 per cent over the current year.
17
Sarva Shiksha Abhiyan
97. The existing operational norms of Sarva Shiksha Abhiyan have been
revised to implement the right of children to free and compulsory education
which has come into force with effect from April 1, 2010. For the year 2011-12,
I propose to allocate `21,000 crore which is 40 per cent higher than `15,000
crore allocated in the Budget for 2010-11. A revised Centrally Sponsored Scheme
Vocationalisation of Secondary Education will be implemented from 2011-12
to improve the employability of our youth.
98. Empowerment flows from Education. While the Scheduled Castes and
Scheduled Tribes had access to post matric scholarships, there was so far a lack
of pre matric scholarship scheme. In 2011-12, I propose to introduce a scholarship
scheme for needy students belonging to the Scheduled Castes and Scheduled
Tribes studying in classes ninth and tenth. It would benefit about 40 lakh
Scheduled Caste and Scheduled Tribe students.
National Knowledge Network
99. Approved in March 2010, the National Knowledge Network (NKN) will
link 1500 Institutes of Higher Learning and Research through an optical fibre
backbone. During the current year, 190 Institutes will be connected to NKN.
Since the core will be ready by March 2011, the connectivity to all 1500
institutions will be provided by March 2012.
Innovations
100. To move beyond the formal R&D paradigm, a National Innovation
Council under Shri Sam Pitroda has been set up to prepare a roadmap for
innovations in India. The process of setting up State Innovation Councils in
each State and Sectoral Innovation Councils aligned to Central Ministries is
underway.
101. The Government has been providing special grants to recognise excellence
in universities and academic institutions. In the course of 2011-12, I propose to
provide:
`50 crore each to upcoming centres of Aligarh Muslim University
at Murshidabad in West Bengal and Malappuram in Kerala;
`100 crore as one-time grant to the Kerala Veterinary and Animal
Sciences University at Pookode, Kerala;
`10 crore each for setting up Kolkata and Allahabad Centres of
Mahatma Gandhi Antarrashtriya Hindi Vishwavidyalaya, Wardha;
`200 crore as one time grant to IIT, Kharagpur;
`20 crore for Rajiv Gandhi National Institute of Youth
Development, Sriperumbudur, Tamil Nadu
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`20 crore for IIM, Kolkata, to set up its Financial Research and
Trading Laboratory;
`200 crore for Maulana Azad Education Foundation;
`10 crore for Centre for Development Economics and Ratan Tata
Library, Delhi School of Economics, Delhi; and
`10 crore for Madras School of Economics.
Skill Development
102. I am happy to inform the House that National Skill Development Council
(NSDC) is well on course to achieve its mandate of creation of 15 crore skilled
workforce two years ahead of 2022, the stipulated target year. It has already
sanctioned 26 projects with a total funding of `658 crore. These projects alone
are expected to create more than 4 crore skilled workforce over the next ten
years. In the current year, skill training has so far been provided to 20,000 persons.
Of these, 75 per cent have found placements. I will provide an additional `500
crore to the National Skill Development Fund during the next year.
103. National celebrations of 150th Birth Anniversary of Gurudev
Rabindranath Tagore will commence from May 7, 2011 in New Delhi.
Important events will be held in several countries in Europe, America and
Asia. A series of events are also proposed to be organized under the aegis of
joint India-Bangladesh Celebrations Committee. An international award with
prize money of `1 crore is being instituted for promoting values of Universal
Brotherhood in the memory of Gurudev Rabindranath Tagore.
Health
104. For health, I propose to step up the plan allocations in 2011-12 by 20 per
cent to `26,760 crore. The Rashtriya Swasthya Bima Yojana has emerged as an
effective instrument for providing a basic health cover to poor and marginal
workers. It is now being extended to MGNREGA beneficiaries, beedi workers
and others. In 2011-12, I propose to further extend this scheme to cover
unorganized sector workers in hazardous mining and associated industries like
slate and slate pencil, dolomite, mica and asbestos etc.
Financial Inclusion
105. In my last budget speech I had advised Banks to provide banking
facilities to habitations having a population of over 2000 by March, 2012. The
Banks have identified about 73,000 such habitations for providing banking
facilities using appropriate technologies. A multi-media campaign,
Swabhimaan, has been launched to inform, educate and motivate people to
open bank accounts. During this year, banks will cover 20,000 villages.
Remaining will be covered during 2011-12.
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Unorganised sector
106. I had announced a co-contributory pension scheme Swavalamban in
the Budget 2010-11. This scheme has been welcomed by the workers in
unorganised sector. Over 4 lakh applications have already been received. On the
basis of the feedback received, I am relaxing the exit norms whereby a subscriber
under Swavalamban will be allowed exit at the age of 50 years instead of 60
years, or a minimum tenure of 20 years, whichever is later. I also propose to
extend the benefit of Government contribution from three to five years for all
subscribers of Swavalamban who enroll during 2010-11 and 2011-12. An
estimated 20 lakh beneficiaries will join the scheme by March 2012.
107. Under the on-going Indira Gandhi National Old Age Pension Scheme
for BPL beneficiaries, the eligibility for pension is proposed to be reduced
from 65 years at present to 60 years. Further, for those who are 80 years and
above, the pension amount is being raised from ` 200 at present to ` 500 per
month.
Environment and Climate Change
Forests
108. Protection and regeneration of forests has great ecological, economic
and social value. Our Government has launched an ambitious ten-year Green
India mission. I propose to allocate `200 crore from the National Clean Energy
Fund to begin its implementation in 2011-12.
Environmental Management
109. Environmental pollution has emerged as a serious public health concern
across the country. I propose to allocate `200 crore from the National Clean
Energy Fund as Centre's contribution in 2011-12 for launching environmental
remediation programmes.
Cleaning of Rivers and Lakes
110. A number of projects under the National Ganga River Basin Authority
have been approved in 2010-11. This momentum will be further stepped up.
There are many rivers and lakes of cultural and historical significance that need
to be cleaned. In the course of the year 2011-12, I propose to provide a special
allocation of `200 crore for the clean-up of some important lakes and rivers
other than the Ganga.
Some Other Initiatives
111. In order to boost development in the North Eastern Region and Special
Category States, the allocation for special assistance has been almost doubled to
`8,000 crore for 2011-12. Out of this, `5,400 crore has been allocated as untied
Special Central Assistance.
112. The Governments special support to Jammu & Kashmir is anchored in
`28,000 crore Prime Minister's Reconstruction Plan. In addition, for the current
20
year, about `8,000 crore has been provided for the State's development needs. A
Task Force to assess infrastructure needs that can be addressed within a time
horizon of 24 months for Ladakh and Jammu regions of the State has
recommended projects amounting to `416 crore and `497 crore, respectively. I
am providing `100 crore for Ladakh and `150 crore for Jammu for these identified
projects in 2011-12.
113. To give a boost to the development of backward regions, the allocation
under the Backward Regions Grant Fund has been increased from `7,300 crore
to `9,890 crore amounting to an increase of over 35 per cent.
114. To address problems related to Left Wing Extremism affected districts,
an Integrated Action Plan (IAP) for 60 selected tribal and backward districts
has been launched in December 2010. The scheme is being implemented with
100 per cent block grant of `25 crore and `30 crore per district during the
years 2010-11 and 2011-12, respectively. The allocated funds are placed at the
disposal of the district level committees who in consultation with local MPs
will have the flexibility to spend the amount on development schemes as per
the local needs.
115. In recognition of the sacrifices made by Central Para-military Forces
engaged in tackling Left Wing Extremism, a lump sum ex-gratia compensation
of `9 lakh for 100 per cent disability will now be granted to personnel of the
Defence and para-military forces who are discharged from service on medical
grounds on account of disability attributable to or aggravated in government
service. For personnel with disability ranging from 20 to 99 per cent, a
proportionate amount would be given.
116. In the Budget 2011-12, a provision of `1,64,415 crore has been made
for Defence services which include `69,199 crore for capital expenditure.
Needless to say, any further requirement for the country's defence would
be met.
117. In order to speed up delivery of justice, the Plan provision for
Department of Justice for 2011-12 has been increased three-fold to `1,000
crore. The enhanced provision will help in building judicial infrastructure and
the project on E-courts.
Census 2011
118. The 15th Census in the country is being conducted from 9th February. It
is the largest administrative exercise in the country providing statistical data on
different socio-economic parameters of population.
119. In response to the overwhelming demand for enumeration of castes other
than Scheduled Castes and Scheduled Tribes in Census 2011, it has been decided
to canvass caste as a separate time bound exercise. This exercise will start in
June 2011 and will be completed by 30th September 2011.
21
IV. Improving Governance
I now turn to some important measures being taken for improving
governance.
UID Mission
120. The UID Mission has taken off and Aadhaar numbers are being generated
in large numbers. So far 20 lakh Aadhaar numbers have been given and from 1st
October 2011, ten lakh numbers will be generated per day. The stage is now set
for realising the potential of Aadhaar for improving service delivery, accountability
and transparency in governance of various schemes.
IT Initiatives
121. The backbone of an efficient tax administration is a robust IT infrastructure
and its deployment for enhanced taxpayer services. Towards this objective, both
the Central Boards of Direct Taxes (CBDT) and Excise and Customs (CBEC)
have put in place the following measures:
The on-line preparation and e-filing of income tax returns,
e-payment of taxes through 32 agency banks, ECS facility for
electronic clearing of refunds directly in taxpayers bank accounts
and electronic filing of TDS returns are now available throughout
the country. These measures have empowered taxpayers to meet
their tax obligations without visiting an income tax office.
The Centralized Processing Centre (CPC) at Bengaluru has
increased its daily processing capacity from 20,000 to 1.5 lakh
returns in 2010-11. This project has won a Gold Award for
e-Governance in 2011. Two more CPCs will become operational
in Manesar and Pune by May 2011 and a fourth CPC will come up
in Kolkata in 2011-12.
With the completion of its IT Consolidation Project, CBEC can
now centrally host its key applications in Customs, Central Excise
and Service Tax. The Customs EDI system now covers 92 locations
across the country. CBEC's e-Commerce portal ICEGATE, has
also been conferred a Gold Award for e-Governance.
The 'Sevottam' concept has been adopted by both Boards. The three
pilot projects of Aaykar Seva Kendras (ASKs) under CBDT have
come of age. CBDT will commission eight more such centres this
year. In 2011-12, another fifty ASKs will be set up across the
country. CBEC has also launched a similar initiative and four of
their pilot projects have been commissioned.
The electronic filing of Tax Deduction at Source (TDS) statements
has stabilized. The Board shall soon notify a category of salaried
taxpayers who will not be required to file a return of income as
22
their tax liability has been discharged by their employer through
deduction at source.
CBDT will provide a separate web-based facility to enable a direct,
stand-alone interface for taxpayers with the Income Tax Department
so that they can report and track the resolution of their refunds and
credit for prepaid taxes.
122. Mission Mode Projects for computerization of Commercial Taxes in
States that I announced in my last Budget, will allow States to align with the
roll out of GST. Funds have been released for 31 projects received from the
States and Union Territories. Most of the States and UTs have already enabled
the facility of dealers making electronic payments. A number of States have
already started accepting Electronic Tax Returns and issuing forms required
for inter-state trade.
123. With the development of the economy, the need to review the provisions
of the Indian Stamp Act, 1899 has been felt over the years. I propose to introduce
a Bill shortly to amend the Indian Stamp Act.
124. Five years ago, we took an initiative to introduce a modern and people-
friendly e-stamping facility in the country. Only six States have introduced this
system so far. I propose to launch a new scheme with an outlay of `300 crore to
provide assistance to States to modernise their stamp and registration
administration and roll out e-stamping in all the districts in the next three years.
125. I propose to introduce a new simplified return form 'Sugam' to reduce
the compliance burden of small taxpayers who fall within the scope of
presumptive taxation.
126. The increase in scope of cases admitted by the Settlement Commissions
has provided relief to several taxpayers. This has also increased the workload of
the Commission. To fast track the disposal of cases, three more Benches of the
Commission are being set up.
127. Substantial amounts of revenue in both direct and indirect taxes, remain
locked up in appeals at different levels. Both Boards also invest substantial effort
and money in litigation with their employees. In keeping with the National
Litigation Policy, several steps have been initiated in 2010-11 for reducing
litigation and focusing attention on high revenue cases. Instructions have been
issued raising limit of tax effects below which, tax disputes will not be pursued
by Government in higher Courts of Appeal. These measures would enhance
productivity of resources employed in raising revenue.
Corruption
128. A Group of Ministers has been constituted to consider measures for
tackling corruption. The Group has been tasked with addressing issues relating
to State funding of elections, speedier processing of corruption cases of public
23
servants, transparency in public procurement and contracts, discretionary powers
of Central ministers and competitive system for exploiting natural resources.
The Group will make its recommendations in a time bound manner.
Performance Monitoring and Evaluation System
129. Pursuant to the recommendations of Second Administrative Reforms
Commission, the Government has set up a Performance Monitoring and
Evaluation System (PMES) to assess the effectiveness of Government
departments in their mandated functions. It involves preparation of a Results
Framework Document (RFD) by each department, highlighting its objectives
and priorities for the financial year and achievements against pre-specified
targets at the end of the year. This document would be available for public
information on the departmental websites. In the first phase, 62 departments
have been covered under PMES.
TAGUP
130. In pursuance of the announcement made in the Budget 2010-11, I had
set up a Technology Advisory Group for Unique Projects (TAGUP). The Group
has submitted its report and its recommendations have been accepted in
principle. The modalities of implementation are being worked out.
131. Indian Rupee now has a new symbol which has been notified for use by
the Central and State Governments, business entities and the general public. A
new series of coins carrying this symbol will be issued shortly. The Government
has approached Unicode Standards Authority for inclusion of the symbol in
international standards.
V. Budget Estimates 2011-12
I now turn to the Budget Estimates for 2011-12.
132. The Gross Tax Receipts are estimated at `9,32,440 crore which is an
increase of 24.9 per cent over the Budget Estimates for 2010-11. After
devolution to States, the net tax to Centre in 2011-12 is `6,64,457 crore. The
Non Tax Revenue Receipts for 2011-12 are estimated at `1,25,435 crore.
133. The total expenditure proposed for 2011-12 is `12,57,729 crore, which
is an increase of 13.4 per cent over the Budget Estimates for 2010-11. The
Plan Expenditure at `4,41,547 crore marks an increase of 18.3 per cent and the
Non Plan Expenditure at `8,16,182 crore is an increase of 10.9 per cent over
BE 2010-11. As 2011-12 is the last year of the Eleventh Plan, I am happy to
share that Eleventh Plan expenditure in nominal terms is more than 100 per
cent of the expenditure envisaged for the Plan period.
134. The total plan and non-plan transfers of `2,01,733 crore to States and UT
Governments in 2011-12 have increased by 23 per cent over the Budget Estimates
24
2010-11. This includes grants of `13,713 crore in 2011-12 to local bodies as per
the recommendation of the Thirteenth Finance Commission.
135. Hon'ble Members are aware that in the course of 2010-11, I had the
opportunity to effect a further improvement in the fiscal balance, due to the
higher than anticipated non-tax revenues from 3G spectrum auctions. I chose
to do that and much more. While I provided additional resources of about
`50,000 crore to critical infrastructure and social sectors and also to meet the
expenditure on subsidies, I have brought down the fiscal deficit from 5.5 per
cent to 5.1 per cent of the GDP for 2010-11. For 2011-12, I have kept it at 4.6
per cent of GDP, which improves upon my own target for 2011-12 indicated in
the fiscal road map presented in the last Budget. In the Medium Term Fiscal
Policy Statement being presented to the House today, the rolling targets for
fiscal deficit are placed at 4.1 per cent for 2012-13, and 3.5 per cent for
2013-14.
136. There has been some concern expressed regarding the stickiness of
Government's revenue deficit in the post-global crisis phase of the economy.
For 2010-11 as against a target of 4 per cent, the revenue deficit is estimated at
3.4 per cent of GDP. In the past few years the transfers to States and other
developmental expenditure have grown significantly. These are classified as
revenue expenditure even though a considerable part of the expenditure from
these transfers is in the nature of capital expenditure. In 2010-11, `90,792
crore from such revenue expenditures were in the nature of capital expenditure.
Similarly, in 2011-12 grants-in-aid for creation of capital assets, which are
now shown separately in the Budget documents, are about `1.47 lakh crore.
Taking these budget provisions into account, the effective revenue deficit is
estimated at 2.3 per cent in the Revised Estimates for 2010-11 and 1.8 per cent
for 2011-12.
137. In my last Budget, I had stated that Government would avoid issuing
bonds in lieu of subsidies to oil and fertiliser companies. I have adhered to this
decision, thereby bringing all subsidy related liabilities into our fiscal
accounting.
138. The fiscal deficit of 4.6 per cent of GDP in 2011-12 works out to
`4,12,817 crore. Taking into account the various other financing items for
fiscal deficit, the net market borrowing of the Government in 2011-12 would
be `3.43 lakh crore. In addition, `15,000 crore is proposed to be financed
through Treasury Bills. Accordingly, the Central Government debt as a
proportion of GDP is estimated at 44.2 per cent for 2011-12 as against 52.5 per
cent recommended by the Thirteenth Finance Commission.
25
PART - B
Madam Speaker,
I shall now present my tax proposals.
139. In the formulation of these proposals, my priorities are directed towards
making taxes moderate, payments simple for the taxpayer and collection of
taxes easy for the tax collector.
VI. Direct Taxes
I shall now deal with direct taxes.
140. As Government's policy on direct taxes has been outlined in the DTC,
which is before Parliament, I have limited my proposals to initiatives that require
urgent attention.
141. Last year I provided relief to individual taxpayers by broadening the
tax slabs. To take us closer to DTC rates, I propose to enhance the exemption
limit for the general category of individual taxpayers from `1,60,000 to
`1,80,000 this year. This measure will provide a uniform tax relief of `2,000
to every taxpayer of this category.
142. Senior citizens deserve our special attention. For them, I propose
to reduce the qualifying age, from 65 years to 60 years;
to enhance the exemption limit from `2,40,000 to `2,50,000;
To create a new category of Very Senior Citizens, eighty years
and above, who will be eligible for a higher exemption limit of
`5,00,000.
143. In the case of corporates, my initiative of phasing out the surcharge
continues. I propose to reduce the current surcharge of 7.5 per cent on domestic
companies to 5 per cent. Simultaneously, I propose to increase the rate of
Minimum Alternate Tax (MAT) from the current rate of 18 per cent to 18.5 per
cent of book profits to keep the effective rate of the MAT at the same level. As
a measure to ensure equal sharing of the corporate tax liability, I propose to
levy MAT on developers of Special Economic Zones as well as units operating
in SEZs.
144. To attract foreign funds for financing of infrastructure, I propose to:
create special vehicles in the form of notified infrastructure debt
funds;
26
subject interest payment on the borrowings of these funds to a
reduced withholding tax rate of 5 per cent instead of the current
rate of 20 per cent;
exempt the income of the fund from tax.
145. In order to promote savings and raise funds for infrastructure, an additional
deduction of `20,000 for investment in long-term infrastructure bonds was
notified by the Central Government in 2010-11. I propose to extend this window
for one more year.
146. It has been represented that the taxation of foreign dividends in the
hands of resident taxpayers at full rate is a disincentive for their repatriation to
India and they continue to remain invested abroad. For the year 2011-12, I
propose a lower rate of 15 per cent tax on dividends received by an Indian
company from its foreign subsidiary. I do hope these funds will now flow
to India.
147. In order to give a boost to production in the agriculture sector, I propose
to extend the benefit of investment linked deduction to businesses engaged in
the production of fertilisers.
148. Considering the importance of housing, I also propose investment linked
deduction to businesses which develop affordable housing under a notified
scheme.
149. In this Decade of Innovation, I enhanced the weighted deduction on
payments made to National Laboratories, universities and Institutes of technology,
for scientific research, to 175 per cent in the last budget. I propose to further
enhance this to 200 per cent.
150. In order to strengthen our system of collection of information from foreign
tax jurisdictions, I propose to provide a toolbox of counter measures to discourage
transactions with entities located in non-cooperative jurisdictions as may be
notified by the Government.
151. My proposals on direct taxes are estimated to result in a net revenue loss
of `11,500 crore for the year.
VII. Indirect Taxes
I shall now turn to my indirect tax proposals.
152. In view of the healthy growth in indirect taxes in 2010-11, I had the
option to roll back the Central excise duty to levels prevailing in November
2008. I have chosen not to do so for two reasons. I would like to see improved
business margins translated into higher investment rates. I would also like to
stay my course towards GST. I have therefore decided to maintain the standard
rate of Central excise duty at 10 per cent.
27
153. I propose certain changes in the Central Excise rate structure to prepare
the ground for the transition to GST, beginning with a reduction in the number
of exemptions. At present, there are about 100 items that are exempt from Central
Excise as well as State VAT. In addition, there are as many as 370 items that
enjoy exemption from Central Excise duty but are chargeable to VAT. I propose
to withdraw the exemption on 130 of these items that are mainly in the nature of
consumer goods. The remaining 240 items would be brought into the tax net
when GST is introduced.
154. A nominal Central Excise duty of 1 per cent is being imposed on the 130
items that are entering the tax net. No Cenvat credit would be available for the
manufacture of these items. Basic food and fuel would continue to be exempt.
This levy would also not apply to precious metals and stones. In case of jewellery
and articles of gold, silver and precious metals, the levy would apply only to
goods sold under a brand name.
155. Most of the States have increased their merit rate of VAT from 4 per cent
to 5 per cent. In line with this, I also propose to enhance the lower rate of Central
Excise duty from 4 per cent to 5 per cent.
156. Ready-made garments and made-ups of textiles are currently under an
optional excise duty regime. A manufacturer is required to pay duty only if he
wishes to avail of Cenvat credit. Our garment and made-ups industry has come
of age and has shown handsome growth in recent years. As part of base expansion,
I propose to convert the optional levy into a mandatory levy at a unified rate of
10 per cent. The levy would however, apply only to branded garments or made-
ups and not to those tailored or made to order for a retail customer. Credit of tax
paid on inputs, capital goods and input services would be available to
manufacturers of these products. Keeping in mind the fragmented nature of this
industry, full SSI exemption is also being extended to these products. Export of
these items would continue to be zero-rated.
157. We have a long term commitment to align our customs duty rates to
those prevailing in ASEAN countries. The peak rate of customs duty has
been reduced over the years and has settled at 10 per cent. In view of
continued uncertainties in the global economy, I propose to hold the peak
rate at its current level. However, some rationalization is being done to unify
three rates namely, 2 per cent, 2.5 per cent and 3 per cent at the middle level
of 2.5 per cent.
158. I now turn to proposals that are aimed at encouraging some of the thrust
sectors that are in need of attention.
Agriculture & Related Sectors
159. Hon'ble Members would recall that, in the last Budget, I had announced
a package of measures to improve the availability of storage and warehouse
facilities for agricultural produce as well as to incentivize food processing.
28
I have received encouraging feedback on the impact of these measures. I propose
to enlarge the scope of these exemptions by:
extending full exemption from excise duty to air-conditioning
equipment and refrigeration panels for cold chain infrastructure;
including conveyor belts in the full exemption from excise duty to
equipment used in cold storages, mandis and warehouses.
160. A concessional rate of basic customs duty of 5 per cent was provided to
specified agricultural machinery in the last budget. This duty is being reduced
further to 2.5 per cent and the concession is also being extended to parts of such
machinery to encourage their domestic production.
161. Micro-irrigation is an environment-friendly and efficient means of
irrigation especially for dry land farming. I propose to reduce the basic customs
duty on micro-irrigation equipment from 7.5 per cent to 5 per cent.
162. De-oiled rice bran cake constitutes an important ingredient of cattle feed
and its improved availability would have a positive impact on milk production.
I propose to provide full exemption from basic customs duty to this item.
Simultaneously, an export duty of 10 per cent would be levied to discourage its
export.
Manufacturing Sector
163. For the manufacturing sector, my proposals seek to encourage domestic
value addition vis-a-vis imports, to remove duty inversions and anomalies and
to provide a level playing field to the domestic industry. The major proposals
are to:
reduce basic customs duty on raw silk (not thrown) from 30 to 5
per cent;
reduce basic customs duty from 5 per cent to 2.5 per cent on certain
textile intermediates and inputs for chemicals, ferro-alloys and
paper;
reduce basic customs duty on certain specified inputs for
manufacture of certain technical fibre and yarn from 7.5 per cent
to 5 per cent;
fully exempt stainless steel scrap from basic customs duty;
reduce import duties on specified raw material for the manufacture
of syringes and needles to 5 per cent basic and 4 per cent CVD;
extend the concession available to parts, components and
accessories for manufacture of mobile handsets till 31st March,
2012 and to include few more items in its ambit;
29
expand the raw material list for manufacture of specified electronic
components that are fully exempt from basic customs duty;
reduce excise duty (and hence CVD) on parts of ink-jet and laser-
jet printers from 10 per cent to 5 per cent.
164. Iron ore attracts an export duty of 15 per cent in the case of lumps and 5
per cent in the case of fines. This is a natural resource which needs to be conserved.
I propose to enhance the rate of export duty for all types of iron ore and unify it
at 20 per cent ad valorem. Iron ore is also exported in a value-added, pelletized
form. Full exemption from export duty is being provided to iron ore pellets to
encourage the value addition process for fines.
165. As a measure of relief to cement industry, I propose to replace the existing
excise duty rates with composite rates having an ad valorem and specific
component with some rationalization. The basic customs duty on two critical
raw materials of this industry viz. petcoke and gypsum is proposed to be reduced
to 2.5 per cent.
166. To drive the financial inclusion agenda of the Government, I propose to
fully exempt cash dispensers from basic customs duty. Full exemption is also
being extended to parts of such machines to encourage their domestic production.
Environment
167. Full exemption from basic customs duty and a concessional rate of Central
Excise duty of 4 per cent was provided to specified parts of electrical vehicles in
the last Budget on actual-user basis. I propose to extend the concession to batteries
imported by such manufacturers for the replacement market.
168. Fuel cell or Hydrogen cell technology is a promising green technology
for the automobile sector. I propose to extend the concessional excise duty of 10
per cent to vehicles based on this technology.
169. Hybrid vehicles enjoy a concessional excise duty rate of 10 per cent.
However, import dependence for their critical parts/ sub-assemblies is still quite
high. It is proposed to grant specified parts of such vehicles full exemption from
basic customs duty and special CVD. In addition, a concessional rate of excise
duty of 5 per cent is being prescribed to incentivise their domestic production.
170. In response to the growing demand for green products, a technology has
been developed indigenously for the conversion of fossil fuel vehicles into Hybrid
vehicles through the fitment of a kit. I propose to reduce the excise duty on such
kits and their parts from 10 per cent to 5 per cent.
171. In the last Budget, Central Excise duty on LED lights was reduced from
8 per cent to 4 per cent to promote their use. The basic component of these lights
viz. the LED attracts an excise duty (hence, CVD) of 10 per cent and a special
CVD of 4 per cent. The excise duty on LEDs is being reduced to 5 per cent and
special CVD is being fully exempted.
30
172. The solar lantern enables our countrymen in far-flung villages to partake
of developments in green technology. The basic customs duty on such lanterns
is being reduced from 10 per cent to 5 per cent. Basic customs duty on a few
more inputs used in the manufacture of solar modules/ cells is being reduced
to Nil.
173. Environmental considerations demand promotion of laundry soaps which
conserve water and are gentle on the soil. To this end, full exemption from basic
customs duty is being provided to Crude Palm Stearin for use in the manufacture
of laundry soap.
174. Pre-tanning or tanning processes in the leather industry use chemicals
which are pollutants. To encourage use of green processes, full exemption from
basic excise duty is being granted to enzyme based preparations for pre-tanning.
Infrastructure
175. Capital goods imported for the expansion of existing mega or ultra mega
power projects enjoy a concessional basic customs duty of 2.5 per cent and full
exemption from CVD. This creates a disability for the domestic suppliers who
are required to pay Central Excise duty on supplies to such projects. I propose to
correct this anomaly by providing a parallel excise duty exemption.
176. Bio-based asphalt is an emerging, green technology for the surfacing of
roads. Full exemption from basic customs duty is being extended to bio-asphalt
and specified machinery for its application in the construction of national
highways. Tunnel-boring machines required for the construction of highways
are also being included in this exemption.
Other Proposals
177. Works of art and antiquities are exempt from customs duties when
imported for exhibition in a public museum or national institution. In recent
years, many organisations have joined the cause of promoting and popularising
both traditional and contemporary art. Some of them have been active in locating
heritage works of Indian art and antiquities in foreign countries and bringing
them back home. To encourage such initiatives, I propose to expand the scope of
this exemption for works of art and antiquities to also apply to imports for
exhibition or display, in private art galleries or similar premises that are open to
the general public. Department of Culture will notify details of the scheme
separately.
178. Full exemption from import duty is available to spares and capital goods
required for ship-repair units. This exemption is being extended to imports by
ship owners too.
179. The concessional basic customs duty of 5 per cent and CVD of 5 per
cent, presently applicable to high-speed printing presses imported by newspaper
establishments is being extended to mailroom equipment.
31
180. The Indian film industry has represented that colour, unexposed jumbo
rolls of cinematographic film are not manufactured domestically and have to
be imported. I propose to exempt jumbo rolls of 400 feet and 1000 feet from
CVD by providing full exemption from excise duty.
181. I propose to provide outright concession to factory-built ambulances in
place of the existing refund-based concession from excise duty. A refund-based
concession is available to taxis having a seating capacity not exceeding 7
persons including the driver. I propose to extend this to vehicles upto a seating
capacity not exceeding 13 persons including the driver.
182. Some of the other relief measures that I propose are:
Reduction in basic customs duty on raw pistachio from 30 per
cent to 10 per cent;
Reduction in basic customs duty on bamboo for agarbatti from
30 per cent to 10 per cent;
Reduction in basic customs duty on lactose for the manufacture
of homeopathic medicines from 25 per cent to 10 per cent; and
Reduction in central excise duty on sanitary napkins, baby and
adult diapers from 10 per cent to 1 per cent.
183. My proposals relating to customs and Central excise are estimated to
result in a net revenue gain of `7,300 crore for the year.
VIII. Service Tax
184. The actual collections of Service Tax do not reflect the full potential of
this sector. While retaining the standard rate of service tax at 10 per cent, I
seek to achieve a closer fit between the present service tax regime and its GST
successor by:
Bringing in a few new services into the tax net to expand the tax
base while ensuring that the impact is predominantly on sections
of society that have the ability to pay;
Suitably expanding or rationalizing the scope of existing service
categories;
Rationalizing certain provisions relating to import of services and
valuation;
Modifying provisions of the Cenvat Credit scheme to achieve a
more realistic balance between input credits and output tax and
harmonising the provisions of the scheme across goods and
services;
32
Rationalizing penal provisions to reinforce the message that honest
taxpayers would be facilitated and deviants would be dealt with
severely; and
Adoption of Point of Taxation rules for services which would shift
the basis for tax collection from cash towards accrual basis as
with Central Excise duty.
185. I propose to levy service tax on the following new services:
Hotel accommodation, in excess of declared tariff of `1,000 per
day with an abatement of 50 per cent so that the effective burden is
only 5 per cent of the amount charged;
Service provided by air-conditioned restaurants that have license
to serve liquor, by giving an abatement of 70 per cent. Thus, the
effective burden will be 3 per cent of the bill.
186. I imposed service tax in 2010-11 on health check up or treatment. This
levy has resulted in differential treatment between persons who make payments
themselves and others where payments are made by an insurance company or a
business entity. Thus, I propose to replace it with a tax on all services provided
by hospitals with 25 or more beds that have the facility of central air-conditioning.
Though the tax is on high- end treatment, I propose to sweeten the pill by an
abatement of 50 per cent so that the actual burden is kept at 5 per cent of the
value of service. I also propose to extend the levy to diagnostic tests of all kinds
with the same rate of abatement. However, all Government hospitals shall be
outside this levy.
187. I propose to raise the service tax on air travel by `50 in the case of domestic
air travel and `250 on international journeys by economy class. I also propose to
tax travel by higher classes on domestic sector at the standard rate of 10 per cent
to bring it on par with journeys by higher classes on international air travel.
188. Services provided by life insurance companies in the area of investment
are also proposed to be brought into tax net on the same lines as ULIPs. I propose
to expand the scope of legal services to include services provided by business
entities to individuals as well as representational and arbitration services by
individuals to business entities. There shall, however, be no tax on services
provided by individuals to other individuals.
189. There are certain other changes mainly by way of rationalisation or
expansion in the scope of certain services or by plugging existing loopholes. I do
not wish to take the valuable time of the House in further elaboration here.
190. The strength of a good value-added-tax lies in the free flow of the credit
of the tax paid at the previous stage. Due to complexities, there have been many
legal disputes on the availability of credit on a number of inputs or input services.
33
These provisions are being rationalized by laying down clear definitions so that
the scope of inputs and input services that are eligible and those that are not, is
clear. Allocation of CENVAT credit to exempt and taxable goods and services is
also being streamlined.
191. The number of assessees in service tax has grown manifold. I find that a
large number of them comprise individuals or sole proprietors with small
turnovers. Any audit at their premises tends to dislocate their activities for the
duration of the audit. I therefore, propose to free all individual and sole proprietor
taxpayers with a turnover upto `60 lakh from the formalities of audit. This will
give relief to a large number of taxpayers. I also intend to give all assessees with
turnover upto `60 lakh, the benefit of 3 percentage points in interest on delayed
payment.
192. In keeping with our thrust to encourage voluntary compliance, the penal
provisions for Service Tax are being rationalised. A key component of this strategy
would be to treat less harshly those who have maintained truthful records but
have fallen short of discharging their tax liability. Simultaneously, deliberate
evaders with unrecorded business transactions will be dealt with more severely.
Similar changes are being carried out in Central Excise and Customs laws. The
details of the provisions are in the Finance Bill.
193. My proposals relating to service tax are estimated to result in net revenue
gain of `4,000 crore for the year.
194. Many experts have argued that it will be desirable to tax services based
on a small negative list, so that many untapped sectors are brought into the tax
net. Such an approach will be very conducive for a nationwide GST. I propose to
initiate an informed public debate on the subject to help us finalise the approach
to GST.
195. Copies of notifications giving effect to the changes in Customs, Central
Excise and Service Tax will be laid on the Table of the House in due course.
196. My proposals on direct taxes are estimated to result in a revenue loss of
`11,500 crore for the year. Proposals relating to indirect taxes are estimated to
result in a net revenue gain of `11,300 crore, leaving a net loss of `200 crore in
the Budget.
197. As an emerging economy, with a voice on the global stage, India stands
at the threshold of a decade which presents immense possibilities. We must not
let the recent strains and tensions hold us back from converting these possibilities
into realities. With oneness of heart, let us all build an India, which in not too
distant a future, will enter the comity of developed nations.
Madam Speaker, with these words, I commend the Budget to the House.
|{i Receipts
(BE {A) (In crore of Rupees)
2009-2010 2010-2011 2010-2011 2011-2012
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+xx +xx +xx
Actuals Budget Revised Budget
Estimates Estimates Estimates
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REVENUE RECEIPTS
1. Tax Revenue
Gross Tax Revenue 624527 746651 786888 932440
Corporation Tax 244725 301331 296377 359990
Income Tax 132315 128066 149066 172026
Wealth Tax 506 603 557 635
Customs 83324 115000 131800 151700
Union Excise Duties 103621 132000 137778 164116
Service Tax 58422 68000 69400 82000
Taxes of the Union
Territories 1614 1651 1910 1973
Less - NCCD transferred
to the National
Calamity Contingency
Fund/NDRF 3160 3560 3900 4525
Less States Share 164831 208997 219303 263458
Centres Net Tax Revenue 456536 534094 563685 664457
2. Non-Tax Revenue
Interest Receipts 21756 19253 19728 19578
Dividend and Profits 50248 51309 48727 42624
External Grants 3141 2060 2756 2173
Other Non-Tax Revenue 39912 74571 147794 59891
Receipts of Union
Territories 1218 925 1143 1169
Total Non-Tax Revenue 116275 148118 220148 125435
Total Revenue Receipts 572811 682212 783833 789892
5
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3. CAPITAL RECEIPTS
*
A. Non-debt Receipts
1. Recoveries of loans &
advances
@
8613 5129 9001 15020
2. Miscellaneous capital
receipts 24581 40000 22744 40000
Total 33194 45129 31745 55020
B. Debt Receipts
3. Market Loans 398424 345010 335414 343000
4. Short term borrowings -9769 10000 15000
5. External Assistance (Net) 11038 22464 22264 14500
6. Securities issued against
Small Savings 13256 13256 17781 24182
7. State Provident
Funds (Net) 16056 7000 10000 10000
8. Other Receipts (Net) -9136 -6322 20539 -13866
Total 419869 381408 415998 392816
Total Capital Receipts (A+B) 453063 426537 447743 447836
4. DRAW-DOWN OF
CASH BALANCE -1387 -15000 20000
Total Receipts (1+2+3+4) 1024487 1108749 1216576 1257728
Financing of Fiscal Deficit
(3B+4) 418482 381408 400998 412817
Receipts under
MSS (Net) -86036 47263 -2737 20000
@ excludes recoveries of
short-term loans and
advances from States
and loans to Government
servants, etc. 4120 1495 16790 11490
|{i Receipts
(BE {A) (In crore of Rupees)
2009-2010 2010-2011 2010-2011 2011-2012
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2009-2010 2010-2011 2010-2011 2011-2012
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1. NON-PLAN EXPENDITURE
A. Revenue Expenditure
1. Interest Payments and
Prepayment Premium 213093 248664 240757 267986
2. Defence Services 90669 87344 90748 95216
3. Subsidies 141351 116224 164153 143570
4. Grants to State and
U.T. Governments 45946 46001 52606 66311
5. Pensions 56149 42840 53262 54521
6. Police 25999 22154 27587 29685
7. Assistance to States
from National Calamity
Contingency Fund/NDRF 3262 3560 3560 4525
8. Economic Services
(Agriculture, Industry, Power,
Transport, Communications,
Science & Technology, etc.) 24106 24928 32216 25391
9. Other General Services (Organs
of State, tax collection,
external affairs, etc.) 16386 17487 18682 19105
10. Social Services (Education,
Health, Broadcasting, etc.) 32791 29483 35085 20862
11. Postal Deficit 6438 3596 5854 5018
12. Expenditure of Union
Territories without Legislature 3334 3190 3660 3592
13. Amount met from National
Calamity Contingency
Fund/NDRF -3160 -3560 -3560 -4525
14. Grants to Foreign
Governments 1561 1688 2139 2301
Total Revenue Non-Plan
Expenditure 657925 643599 726749 733558
B. Capital Expenditure
1. Defence Services 51112 60000 60833 69199
2. Other Non-Plan
Capital Outlay 10952 31051 27696 13212
3. Loans to Public Enterprises 548 539 5871 496
4. Loans to State and
U.T. Governments 83 89 85 85
5. Loans to Foreign
Governments 124 ... ...
6. Others 352 379 318 -368
Total Capital Non-Plan
Expenditure 63171 92058 94803 82624
Total Non-Plan Expenditure 721096 735657 821552 816182
Oil Marketing Companies 10306 ... ...
]{{h: - : : --1 Note: Issue of Special Securities in lieu of subsidies.
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7
B Expenditure
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2009-2010 2010-2011 2010-2011 2011-2012
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2. PLAN EXPENDITURE
A. Revenue Expenditure
1. Central Plan 178802 230881 242034 268287
2. Central Assistance
for State & Union
Territory Plans 75082 84244 84894 95317
State Plan 71254 81683 82489 92168
Union Territory Plan 3828 2561 2405 3149
Total Revenue Plan
Expenditure 253884 315125 326928 363604
B. Capital Expenditure
1. Central Plan 40099 49719 56578 67234
2. Central Assistance
for State & Union
Territory Plans 9408 8248 11518 10709
State Plan 7904 7241 10490 9067
Union Territory Plan 1504 1007 1028 1642
Total Capital Plan Expenditure 49507 57967 68096 77943
Total - Plan Expenditure 303391 373092 395024 441547
Total Budget Support
for Central Plan 218901 280600 298612 335521
Total Central Assistance
for State & UT Plans 84490 92492 96412 106026
TOTAL EXPENDITURE * 1024487 1108749 1216576 1257729
DEBT SERVICING
1. Repayment of debt ** 81764 137276 149678 100927
2. Total Interest Payments 213093 248664 240757 267986
3. Total debt servicing
(1+2) 294857 385940 385435 368913
4. Revenue Receipts 572811 682212 783833 789892
5. Percentage of 2 to 4 37.2% 36.4% 30.7% 33.9%
17
FISCAL POLICY STRATEGY STATEMENT
A. FISCAL POLICY OVERVIEW
1. The annual Budget for the financial year 2010-
11 was presented in the background of signs of
recovery in the global economy led by emerging
market economies. Uncertainty however was still
persisting at that point of time, particularly in Europe
where some of the countries were facing difficult fiscal
situation and probability of sovereign debt default was
looming large. India along with other emerging market
economies continued to be the fastest growing
economies in 2009-10. The latest released data on
2009-10 growth shows that India has performed even
better (8.0 per cent growth rate) than what was
estimated earlier (7.4 per cent). Details of this may
be read i n the Macro-Economi c Framework
Statement.
2. Formulation of Budget 2010-11 was done in this
uncertain situation where on the one hand government
had to start unwinding expansionary measures which
were not sustainable in the medium term and on the
other hand the exit policy had to be calibrated in such
careful manner that it would not hurt the revival
process in the middle of recovery. Looking back at
the performance in the first half of 2010-11, wherein
Indian economy grew at 8.9 per cent, and is estimated
to grow at 8.6 per cent in the full year, it is evident that
governments policy of gradual exit has yielded desired
result. Moreover, the recovery is swift and broad
based.
3. Budget 2010-11 had enumerated the path for
fiscal consolidation in the medium term and the
process started with targeted fiscal deficit of 5.5 per
cent of GDP in 2010-11 from a level of 6.5 per cent
(inclusive of bonds issued in lieu of securities) in 2009-
10. Even when the demand of resources was at higher
level, the government kept to its commitment towards
not exceeding the fiscal deficit beyond 5.5 per cent of
GDP. During the year 2010-11, with higher receipts of
non-tax revenue through 3G and BWA auction,
government decided to increase financial allocation
for priority sectors without exceeding the fiscal deficit
target.
4. With better than estimated tax revenue aided
with higher growth in GDP, the fiscal deficit in 2010-
11 is estimated to decline to 5.1 per cent of GDP as
against 5.7 per cent recommended in the 13
th
Finance
Commission fiscal consolidation roadmap. However,
higher nominal GDP growth (due to inflation) coupled
with tax measures undertaken during the crisis period
has resulted in decline in Tax to GDP ratio significantly.
5. The gross tax to GDP ratio which increased to
an all time high of 11.9 per cent in 2007-08, thanks to
the economy riding on high growth trajectory, has
sharply declined to 10.8 per cent in 2008-09 and 9.5
per cent in 2009-10. At the same time total expenditure
as percentage of GDP (inclusive of securities in lieu
of subsidies) has increased from 15.1 per cent in 2007-
08 to 17.6 per cent in 2008-09 and moderated to 15.7
per cent in 2009-10. The decline in tax to GDP ratio
coupled with higher expenditure brought out the
problems of structural imbalance in fiscal account.
Though part of this imbalance was of cyclical nature,
however a large proportion of the increase in fiscal
deficit could be attributed to structural problems.
Government has started addressing this issue in the
right earnest. The medium term fiscal policy statement
brings out in detail the strategy of the government to
reduce the fiscal deficit closer to the mandated level
under the FRBM Act and Rules by 2013-14. However,
the revenue deficit as percentage of GDP is estimated
to decline from 5.3 per cent in 2009-10 (inclusive of
Securities issued in lieu of subsidies) to 3.4 per cent
in RE 2010-11. This correction is largely attributed to
higher non tax receipts from 3G and BWA spectrum
auction. In absence of this source of revenue in the
coming financial year, revenue deficit is estimated to
be static at 3.4 per cent of GDP in BE 2011-12. It is
further projected to decline to 2.1 per cent of GDP by
2013-14. The revenue deficit and fiscal deficit in R.E.
2010-2011 are higher than the targets set under the
FRBM Act and Rules. The deviation from the mandate
under FRBM Act and Rules may be seen in the context
of developments during 2008-09 and 2009-10. With
the decision of the government to revert back to the
path of fiscal consolidation starting from 2010-11, it is
estimated to bring down the fiscal deficit from 7.8 per
cent (inclusive of oil and fertiliser bonds) in 2008-09
to 4.6 per cent in BE 2011-12. The projections for
fiscal deficit under MTFP Statement show marginal
improvement from the 13
th
Finance Commission
recommendations.
6. It may be recalled that the Government had
made a conscious effort to avoid issuing Government
securities in lieu of cash subsidies to oil and fertiliser
companies. This trend of extending Government
subsidy in cash rather than by way of bonds will
continue in coming years, thereby bringing in all
subsidy related liabilities into Governments fiscal
accounting. For the year 2011-12, sum of ` `` ``20,000
crore has been provided for compensation to oil
17
18
companies for under recoveries in select petroleum
products.
7. The Budget 2011-2012 is being presented in the
background when Indian economy has swiftly come
back to a broad based growth recovery path. However,
the rising inflation which is becoming sticky has to be
addressed through pol i cy and admi ni strati ve
measures through this Budget. On one hand the
government has to ensure that the continuance of
recovery is aided through policy actions and at the
same time the growth trajectory has to be balanced
with rising concerns on inflation.
B. FISCAL POLICY FOR 2011-12
8. The fiscal policy of 2011-12 will continue to be
guided by the principles of gradual adjustment from
the fiscal expansion undertaken during the crisis
period in 2008-09 and 2009-10. The adjustment path
has been slightly front loaded when compared to the
recommendations of the 13
th
FC. It may be seen that
the fiscal deficit is estimated at 5.1 per cent and 4.6
per cent of GDP as against 5.7 per cent and 4.8 per
cent in 2010-11 and 2011-12 respectively. This
accelerated adjustment will help the government in
reducing the debt to GDP ratio at faster pace which in
turn will help in unlocking more resources from
government revenue in future to be used for
developmental programmes instead of debt servicing.
In order to achieve the enumerated accelerated fiscal
consolidation path, the government has focused on
expenditure correction in 2011-12. In the absence of
one time receipts from spectrum auction and only
gradual improvement in tax to GDP ratio, the structural
nature of fiscal imbalance can not be addressed
without controlling overall expenditure.
9. Total expenditure of the government is estimated
to decline from 15.7 per cent in 2009-10 to 15.4 per
cent in RE 2010-11 and 14.0 per cent in BE 2011-12.
The l ower than expected correcti on i n total
expenditure in RE 2010-11 could be seen in the
context of additional revenue available (of the order
of 1.3 per cent of GDP from 3G and BWA spectrum
auction) with the government. Sharp correction in BE
2011-12 is designed with reorientation of expenditure
to priority sectors and reducing the growth of non-
pl an expendi ture. Whi l e pl an expendi ture as
percentage of GDP i n BE 2011-12 has been
maintained almost at the level of RE 2010-11, non
plan expenditure has dropped from 10.5 per cent in
RE 2010-11 to 9.1 per cent in BE 2011-12. This
reduction was possible partly with lower residual
commitments on account of Agricultural Debt waiver
and Debt relief facilities, one off salary arrear
payments to defence personnel and educational
institutions in RE 2010-11 and lower growth in subsidy
out go (as percentage of GDP) for 2011-12 when
compared to 2010-11. The reducti on i n total
expenditure is key to the fiscal adjustment path and it
would be a challenging task to adhere to it during the
course of the year.
10. In order to keep the overall expenditure under
the estimated level, government has taken certain
decisions to control the growth of expenditure in
subsides and other related items. Decision of the
Government on move towards nutrient based subsidy
(NBS) regime in fertiliser subsidy along with increase
in the MRP of urea have helped in containing
expenditure on fertilser subsidy during 2010-11 when
compared to 2009-10. At the same time, NBS regime
is also expected to promote balanced use of fertilizer
with increase in agricultural productivity. Unshackling
of fertilizer industry is also expected to attract fresh
investments in this sector. Based on successful
introduction of NBS policy for other fertilizers except
urea, Government is actively considering the
extension of NBS regime to cover urea as well. It is
also proposed to encourage the use of bio and organic
fertilisers to reduce reliance on imported fertilsers.
11. With respect to rationalization of petroleum
subsidy, government has already decontrolled the
pricing of petrol. In a departure from the past practice,
the Government has started providing petroleum
subsidy for under recoveries of oil marketing
companies in cash instead of securities from the year
2009-10. In order to arrest the diversion of subsidised
kerosene oil, LPG and fertilizers and to ensure greater
efficiency, cost effectiveness and better delivery, the
Government will move towards direct transfer of cash
subsidy to people living below poverty line in a phased
manner.
12. In a move towards better depiction of revenue
expenditure of the government, starting from BE 2011-
12, data is being collated to depict how much of
Centres revenue expenditure is actually in the form
of grant for the creation of capital assets to the other
tiers of government as well as other grantee bodies.
This information would help in determining the
effective imbalance in the revenue account which
government should eliminate in a given timeframe with
desired policy initiatives and administrative efficiency.
Tax Policy
13. In recent years, tax policy has been guided by
the need to increase the tax-GDP ratio and achieve
fiscal consolidation. In these years, the tax-GDP ratio
improved significantly from 9.2 per cent in 2003-04 to
11.9 per cent in 2007-08. This has been achieved
19
through rationalisation of the tax structure (moderate
levels and a few rates), widening of the tax base, and
reduction in compliance costs through improvement
in tax administration. The extensive adoption of
information technology solutions and re-engineering
of business processes has also fostered a less
intrusive tax system and encouraged voluntary
compliance. These measures have resulted in
increased buoyancy in tax revenues till 2007-08 and
helped in fiscal consolidation. However, the process
of consolidation was paused during the crisis period
of 2008-09 and 2009-10 and various fiscal and
administrative measures were undertaken to insulate
Indian economy from the adverse impact of global
economic crisis.
14. Due to the policy interventions for inflation
management and subsequently for providing a
stimulus to growth, Government had to forego
substantial revenues from excise and customs duties
during 2008-09 and 2009-10. On the positive side,
however, the results of these proactive measures have
helped in swift and broad based recovery particularly
in manufacturing and services sector.
Indirect taxes
15. The strategic priority of the Government in the
area of indirect taxation continues to be to achieve
further improvement in the tax-GDP ratio through an
expansion in the tax base, removal of exemptions and
moderation of tax rates. It is an important priority to
reduce complexities in the tax system by rationalizing
the number of taxes, reducing rate dispersion and
simplifying procedure so that voluntary compliance is
encouraged. Maintaining the integrity of the credit
chain is also a key priority as it reduces cascading
and improves the overall efficiency of a VAT type of
tax. With the blurring of distinction between goods
and services, it is equally important to harmonise the
provisions across Central Excise and Service Tax to
prevent anomalies and leakages.
16. In the medium term, these objectives are sought
to be achi eved through the i ntroducti on of a
comprehensive Goods and Services Tax (GST). A
dialogue is already underway between the Centre and
the States for designing the structure and framework
of this tax and the Central Government proposes to
i ntroduce a Consti tuti onal Amendment Bi l l i n
Parliament to enable the levy of GST by the Centre
and the States.
17. The overall approach to tax proposals in this
Budget is dovetailed to this medium term objective.
In specific terms, proposals aimed at taking forward
the path of fiscal consolidation without adversely
affecting economic growth are summarized as under:
CENTRAL EXCISE:
i. Enhancement in the merit rate of Central Excise
from 4% to 5%
ii. Expansion of the tax base through
a. Imposition of a nominal duty of 1% ad
valorem on about 130 items that were
hitherto exempt or chargeable to nil rate of
duty without CENVAT credit
b. Imposition of mandatory excise duty of 10%
on ready made garments bearing or sold
under a brand name
iii. Rationalization of rate structure on paper and
availability of CENVAT credit to ship-breaking
units
CUSTOMS:
i. Enhancement in export duty on iron ore at a
unified rate of 20% for both lumps and fines
ii. Rationalisation of customs duty rates of 2%,2.5%
and 3% to the median rate of 2.5% as well as
the rate structure for aircraft
SERVICE TAX:
i. Imposition of service tax on a few more service
categories
ii. Rationalisation in the scope of many existing
service categories such as insurance, banking
and fi nanci al servi ces, heal th servi ces,
commercial training and coaching, clubs or
associations etc.
iii. Rationalisation in the valuation provisions and
import rules; and
iv. Rationalisation of the CENVAT Credit scheme
provi si ons especi al l y wi th regard to the
apportionment of credit between dutiable/taxable
and exempt goods or services.
Direct Taxes
18. The contribution of direct taxes to the total
taxes collected by the Centre has increased in the
last decade from 33.8% in 1999-2000 to 58.6% in
2009-10.
19. The substantial increase in direct taxes has
been based on the following strategy:
(i) Mai ntai ni ng moderate rates of tax whi l e
expandi ng the tax base by mi ni mi zi ng
exemptions and phasing out profit linked
deductions.
(ii) Strengthening tax administration to provide better
taxpayer services and increased deterrence
levels to promote voluntary compliance.
20
(iii) Re-engineering the business processes in the
Income-tax Department through extensive use
of information technology, viz., electronic
reporting of tax collections, e-filing of returns,
issue of refunds through ECS and refund
bankers, computer assisted selection of returns
for scrutiny, electronic reporting of foreign
remittances liable to tax, online reporting and e-
mailing of tax deduction at source details to
taxpayers, etc.
20. The Union Budget for 2010-11 announced that
after concluding wide-ranging discussions with
stakeholders, the Government would implement the
Di rect Taxes Code from Apri l 1, 2011. The
Government has subsequently introduced the Direct
Taxes Code Bill, 2010 (DTC) in Parliament in August,
2010. The DTC consolidates and integrates all direct
tax laws, simplifies the language by using direct, active
speech, indicates stability in direct tax rates by
proposing the rates of taxes in a Schedule to the Code,
strengthens taxation provisions for international
transactions, further moderates the tax rates,
minimizes exemptions and deductions to widen the
tax base, and replaces profit linked deductions with
investment linked deductions for priority areas. In
order to help tax payers, tax practitioners as well as
tax administrators to adjust to the new provisions and
procedures, the legislation is proposed to be effective
from April 1, 2012. It is currently being examined in
Parliament by the Standing Committee on Finance.
21. The major policy proposals in the Union Budget
2011-12 intended to consolidate past achievements
and align with the DTC provisions are:
(i) Enhancing the exemption limit of Personal
Income Tax (PIT) for the general category of
individual taxpayers. This will reduce the tax
liability of a majority of individual taxpayers.
(ii) Reducing the surcharge on Corporate Income
Tax (CIT) in the case of domestic companies
from 7.5 per cent to 5 per cent. Thi s reduces
the overall rate (inclusive of surcharge and cess)
from 33.2 per cent to 32.4 per cent. In the case
of foreign companies, the surcharge has been
reduced from 2.5 per cent to 2 per cent.
(iii) Increasing the rate of Minimum Alternate Tax
(MAT) on companies from 18 per cent to 18.5
per cent. This will keep the effective rate of MAT
(inclusive of surcharge and cess) at the same level.
(iv) Levying Minimum Alternative Tax (MAT) in case
of SEZ developers and units located in SEZ.
Dividend Distribution Tax (DDT) is also proposed
to be levied in the case of SEZ developers.
(v) Proposing an Alternate Minimum Tax (AMT) on
Limited Liability Partnerships (LLPs) to preserve
the tax base vis--vis profit-linked deductions.
22. A number of administrative initiatives are also
proposed to reduce the compliance burden and
promote voluntary compliance. Some of these are
detailed below.
(i) A category of salaried taxpayers, who will not
be required to file returns of income, wi l l be
notified.
(ii) A new simplified return form for taxpayers who
fall within the scope of presumptive taxation
(businesses with turnover less than Rs.60 lakhs)
will be introduced.
(iii) Three more Benches of Settlement Commission
will be set up to fast track the resolution of tax
disputes.
(iv) The tax effect limits of tax disputes which the
Government will not litigate in higher courts have
been raised.
(v) The administrative as well as legislative
framework for exchange of information with
other countries is being strengthened.
The information technology initiatives are as follows:
(i) The Centralised Processing Centre (CPC) at
Bengaluru is now processing 1.5 lakh returns
per day. Two new CPCs at Manesar and Pune
will be functional by May, 2011. Another CPC
will be set up at Kolkata in 2011-12.
(ii) Three taxpayer help centres called Aayakar
Seva Kendras (ASKs) are already functional.
Eight ASKs will begin operations in 2010-11 while
fifty more will be set up in 2011-12.
(iii) A web based facility which will provide direct,
stand alone interface for taxpayers to report and
track refunds and credit for prepaid taxes will
be set up in 2011-12.
Contingent and other Liabilities
23. The FRBM Act mandates the Central
Government to specify the annual target for assuming
contingent liabilities in the form of guarantees.
Accordingly the FRBM Rules prescribe a cap of 0.5
per cent of GDP in any financial year on the quantum
of guarantees that the Central Government can
assume in the particular financial year. The Central
Government extends guarantees primarily on loans
from multilateral/bilateral agencies, bond issues and
other l oans rai sed by vari ous Publ i c Sector
Undertakings/Public Sector Financial Institutions.
21
24. In furtherance to better management of
contingent liabilities, government guarantee policy has
been framed and released during 2010-11. It
enumerates various principles which need to be
followed before new contingent liabilities in the form
of sovereign guarantees are undertaken. These
principles inter alia include assessment of risk and
probability of devolvement, institutional limits on
guarantees for limiting exposure towards select
sectors and requirement of guarantee vis a vis other
forms of budgetary support or comfort. Additional
measures to further streamline the process of
assuming risk could include charging of risk based
premia, disincentive for wilful default, only part sharing
of risk by the government and insisting on guaranteed
debt cost to be near the bench marked government
securities rate.
25. The stock of contingent liabilities in the form of
guarantees given by the government has increased
in absolute terms from Rs.1,07,957 crore at the
beginning of the FRBM Act regime in 2004-05 to
` `` ``1,37,460 crore at the end of 2009-10. However, as a
percentage of GDP, it has reduced from 3.3 per cent
in 2004-05 to 2.1 per cent in 2009-10. The disclosure
statement on outstanding Guarantees as prescribed
in the FRBM Rules, 2004 is appended in the Receipts
Budget as Annex 5 (iii).
26 During the year 2009-10, gross addition in
guarantees was Rs.37,102 crore amounting to 0.6 per
cent of GDP. However, net addition in guarantees
during 2009-10 was Rs.24,126 crore amounting to
0.4 per cent of GDP. The assumption of contingent
liability in the form of guarantee for 2009-10 was higher
than the target of 0.5 per cent of GDP set under the
FRBM Rules. This deviation has been necessitated
in the larger interest of re-invigorating the economy
in the background of the economic slowdown, to
stimulate demand and increase investment in
infrastructure sector projects with assistance from
multilateral agencies. In the medium term while this
may not have a potential budgetary impact, the
additional investment will help restore the economy
to its higher growth path and contribute to higher
revenue buoyancy.
Government Borrowings, Lending and
Investments
27. Finance Minister in his Budget Speech for 2010-
11 has indicated his intention to bring out a status
paper giving detailed analysis of the governments
debt situation and a road map for curtailing the overall
public debt. Accordingly, in November 2010, a paper
Government Debt Status and Road Ahead has
been brought out with detailed analysis of status of
Central Government debt. At the same time it also
charts out a well calibrated roadmap for reduction in
the overall debt as percentage of GDP for the general
government during the period 2010-11 to 2014-15.
28. The Government policy towards borrowings to
finance its deficit continues to remain anchored on
the following principles, namely (i) greater reliance
on domestic borrowings over external debt, (ii)
preference for market borrowings over instruments
carrying administered interest rates, (iii) consolidation
of the debt portfolio and (iv) development of a deep
and wide market for Government securities to improve
liquidity in secondary market.
29. The overall objective of the Government debt
management policy is to meet Central Governments
financing need at the lowest possible long term
borrowing costs and also to keep the total debt within
sustainable levels. Additionally, it aims at supporting
development of a well functioning and vibrant domestic
bond market.
30. During 2010-11, market borrowings of the
government through dated securities have remained
within the estimated requirement in BE 2010-11. Gross
and net market borrowings (dated securities) of the
Central Government were estimated at ` `` ``4,57,143
crore and ` `` ``3,45,010 crore in BE 2010-11. During the
current financial year (upto 27
th
February, 2011), gross
and net market borrowings through dated securities
amounted to ` `` ``4,37,000 crore and ` `` ``3,25,414 crore
respectively as compared to Rs.4,18,000 crore and
` `` ``3,65,411 crore respectively during the previous
financial year. Including the de-sequestered amount
from MSS, the gross and net market borrowings during
the previous year for the same period amounted to
` `` ``4,46,000 crore and ` `` ``3,93,411 crore respectively.
31. The weighted average maturity of dated
securities issued during 2010-11 (upto 27
th
February,
2011) at 11.62 years was higher than 11.16 years in
the corresponding period of 2009-10. Reflecting
tightening of yields as also upward sloping yield curve,
the weighted average yield of issuance during the
same period was higher at 7.9 per cent during 2010-
11 compared to 7.2 per cent in 2009-10.
32. The debt financing strategy for 2011-12 has
been formulated after factoring in the comfortable cash
position of the government in the current financial year
as well as the existing inflationary expectations in the
economy. Along with other components of financing,
fiscal deficit of ` `` ``4,12,817 crore is proposed to be
financed to the extent of ` `` ``3,43,000 crore (amounting
22
to 83 per cent of deficit) through issuance of dated
securities, `24,182 crore (5.9 per cent of deficit)
through securities issued against NSSF, `15,000 crore
through Treasury Bills (3.6 per cent of deficit), `14,500
crore (3.5 per cent of deficit) of external debt and
`20,000 crore (4.8 per cent of deficit) through cash-
draw down from the built up estimated in the current
financial year.
33. The outstanding balance under Market
Stabilization Scheme (MSS) on 1
st
April, 2010 was
`2,737 crore. There is no balance estimated at the
end of financial year 2010-11. Net accretion in MSS to
the tune of `20,000 crore is estimated for BE 2011-12.
34. The shift in policy on the uses of disinvestment
proceeds from Central PSUs received under the
National Investment Fund (NIF) will continue for the
year 2011-12. The disinvestment proceeds received
during 2011-12 have been reckoned as resources for
the purpose of financing the social sector programmes
which are creating capital assets. However, the
income from investments made from proceeds
received upto 2008-09 under NIF would continue to
be used to finance social infrastructure and provide
capital to viable public sector enterprises without
depleting the corpus of NIF.
35. Middle office has started bringing out various
reports and information with respect to public debt.
The debt issuance calendar along with selection of
instruments for issuance is now being done in
consultation with Middle Office and RBI. In due course
it will transit into the proposed Debt Management
Office.
Initiatives in Public Expenditure
Management
36. The focus on outcomes has got institutionalized
with the practice of select departments being
mandated to come up with their Result Framework
(RF) Document. This puts emphasis on tracking on
measurable outcomes in the form of Key Performance
Indicators (KPIs). Result Frameworks are so drawn
up that quarterly monitoring becomes possible. During
the year, the RF as well as the achievements against
the KPIs are being reviewed by a Committee on
Government Performance and the report of such
review are being submitted to the Prime Minister
through the concerned Minister for further action as
deemed necessary. At the end of the year, all
Ministries/Departments covered under the RF system
review and prepare a report listing the achievements
against the agreed goals in form of KPIs and these
results are to be placed before the Cabinet for
information by 1st June of each year.
37. Initiatives have also been taken to evenly pace
the plan expenditure during the year and also to avoid
rush of expenditure at the year end. The practice of
restricting the expenditure in the month of March to
15 per cent of budget allocation within the fourth
quarter ceiling of 33 per cent is being enforced. The
quarterl y exchequer control based cash and
expenditure management system which inter alia
involves preparing a Monthly Expenditure Plan (MEP)
continues to be followed in select Demands for Grants.
The emphasis is on right pacing plan expenditure by
ensuring adequate resources for execution of
budgeted schemes.
38. Central Plan Scheme Monitoring System
(CPSMS) is an initiative towards establishing a suitable
on-line management information and decision support
system. This MIS tracks devolution of funds as well
as their utilization through all tiers of implementing
agenci es and i n some cases upto the end
beneficiaries. The real time availability of information
on status of fund utilization and balances in respective
bank accounts will enable better cash management
system with timely release of adequate funds and
avoi dance of parki ng of funds wi thout actual
requirement. While ensuring reduced cost of carrying
borrowed fund, it will also bring in accountability as
people can access information about a particular
scheme in their respective areas.
C. POLICY EVALUATION
39. Fiscal performance along with growth in economy
during 2010-11 has been better than the budget
estimates presented in February 2010. While fiscal
deficit is estimated to decline from 5.5 per cent of GDP
in BE 2010-11 to 5.1 per cent in RE 2010-11, the growth
in Indian economy is estimated at 8.6 per cent against
8.5 per cent estimated in Budget 2010-11. The growth
in 2010-11 has to be seen on top of 8 per cent growth
in 2009-10 as per CSOs latest estimates. Better than
estimated performance during 2010-11 has reinforced
the belief in the strategy adopted for fiscal consolidation
with calibrated exit from expansionary measures.
However, the pressure on inflation front has to be dealt
with in focused manner.
40. The process of fiscal consolidation which
resumed in 2010-11 will be continued during 2011-12
after the deviations experienced during 2008-09 and
2009-10. Though the tax revenue base has not yet
23
reached near to the level of 2007-08, still, by doing
expenditure reforms, together with better non tax
revenue realization and with the help of disinvestment
proceeds, the Government is able to bring down the
estimated fiscal deficit in 2011-12 to 4.6 per cent of
GDP. This is better than the target of 4.8 per cent
recommended by the 13
th
FC. It is further projected
to be brought down to 4.1 per cent of GDP in 2012-13
and 3.5 per cent in 2013-14. The suggested roadmap
on fiscal consolidation will help in reducing the debt
to GDP ratio from 48.1 per cent in 2009-10 to 44.2
per cent in BE 2011-12 and further to 41.5 per cent
by 2013-14. This reduction in debt GDP ratio may be
seen in the context of recommended debt level of 44.8
per cent of GDP by 2014-15 by the 13
th
FC.
41. There are however difficulties in achieving
revenue surplus. This was explained in detail in the
Fiscal Policy Strategy Statement of 2010-11. Revenue
expenditure of the Central Government also includes
releases made to States and other implementing
agencies for implementation of Government schemes
and programmes. The outcomes of many of these
schemes are not in the nature of the outcomes related
to revenue expenditure. In most of the cases these
schemes are primarily in nature of creating durable
assets but these assets are not owned by the Central
Government. Therefore, in technical classification of
revenue and capital account, the Central Government
is not able to show expenditure on these schemes as
capital expenditure. Examples of such schemes are
Raj i v Gandhi Grameen Vi dyuti karan Yoj ana,
Jawaharlal Nehru National Urban Renewal Mission,
Pradhan Mantri Gram Sadak Yojana, Accelerated
Irrigation Benefit Programme etc. Over the years,
the number of such schemes funded by the Central
Government and implemented by States/autonomous
bodies has increased significantly. This has resulted
in significant increase in funds transfer from Centre
to States/autonomous bodies resulting in higher
revenue expenditure. However, these revenue
expenditures cannot be treated as unproductive in
nature. On the contrary, they contribute to growth in
economy. Starting from this year, a statement is being
presented in Expenditure Budget Volume 1, which
collates all such grants to various tiers of government
which are used for creation of capital assets. The total
expenditure on such items are significant at about 1.6
per cent of GDP. This reflects that half of the
government revenue deficit is attributed towards these
grants and therefore effective revenue deficit of the
government is estimated at 1.8 per cent of GDP in
2011-12. It would be the endeavour of the government
to eliminate this component of revenue deficit in the
medium term.
Key Features of Budget 2011-2012
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.
2
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 Centres 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.
3
Peoples 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.
` 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.
INVESTMENT ENVIRONMENT
Foreign Direct Investment
Discussions underway to further liberalise the FDI policy.
Foreign Institutional Investors
SEBI registered mutual funds permitted to accept subscription from foreign
investors who meet KYC requirements for equity schemes.
To enhance flow of funds to infrastructure sector, the FII limit for investment in
corporate bonds issued in infrastructure sector being raised.
Financial Sector Legislative Initiatives
To take the process of financial sector reforms further, various legislations
proposed in 2011-12.
Amendments proposed to the Banking Regulation Act in the context of additional
banking licences to private sector players.
Public Sector Bank Capitalisation
` 6,000 crore to be provided during 2011-12 to enable public sector banks to
maintain a minimum of Tier I CRAR of 8 per cent.
Recapitalisation of Regional Rural Banks
` 500 crore to be provided to enable Regional Rural Banks to maintain a CRAR
of at least 9 per cent as on March 31, 2012.
4
Micro Finance Institutions
India Microfinance Equity Fund of ` 100 crore to be created with SIDBI.
Government considering putting in place appropriate regulatory framework to
protect the interest of small borrowers.
Womens SHGs Development Fund to be created with a corpus of ` 500 crore.
Rural Infrastructure Development Fund
Corpus of RIDF XVII to be raised from ` 16,000 crore to ` 18,000 crore.
Micro Small and Medium Enterprises
` 5,000 crore to be provided to SIDBI for refinancing incremental lending by
banks to these enterprises.
` 3,000 crore to be provided to NABARD to provide support to handloom weaver
co-operative societies which have become financially unviable due to
non-repayment of debt by handloom weavers facing economic stress.
Public sector banks to achieve a target of 15 per cent as outstanding loans to
minority communities under priority sector lending at the earliest.
Housing Sector Finance
Existing scheme of interest subvention of 1 per cent on housing loan further
liberalised.
Existing housing loan limit enhanced to ` 25 lakh for dwelling units under priority
sector lending.
Provision under Rural Housing Fund enhanced to ` 3,000 crore.
To enhance credit worthiness of economically weaker sections and LIG
households, a Mortgage Risk Guarantee Fund to be created under
Rajiv Awas Yojana.
Central Electronic Registry to prevent frauds involving multiple lending on the
same immovable property to become operational by March 31, 2011.
Financial Sector Legislative Reforms Commission
Financial Sector Legislative Reforms Commission set up to rewrite and streamline
the financial sector laws, rules and regulations.
Companies Bill to be introduced in the Lok Sabha during current session.
AGRICULTURE
Removal of production and distribution bottlenecks for items like fruits and
vegetables, milk, meat, poultry and fish to be the focus of attention this year.
5
Allocation under Rashtriya Krishi Vikas Yojana (RKVY) increased from
` 6,755 crore to ` 7,860 crore.
Bringing Green Revolution to Eastern Region
To improve rice based cropping system in this region, allocation of
` 400 crore has been made.
Integrated Development of 60,000 pulses villages in rainfed areas
Allocation of ` 300 crore to promote 60,000 pulses villages in rainfed areas.
Promotion of Oil Palm
Allocation of ` 300 crore to bring 60,000 hectares under oil palm plantations.
Initiative to yield about 3 lakh Metric tonnes of palm oil annually in five years.
Initiative on Vegetable Clusters
Allocation of ` 300 crore for implementation of vegetable initiative to provide
quality vegetable at competitive prices.
Nutri-cereals
Allocation of ` 300 crore to promote higher production of Bajra, Jowar, Ragi and
other millets, which are highly nutritious and have several medicinal properties.
National Mission for Protein Supplement
Allocation of ` 300 crore to promote animal based protein production through
livestock development, dairy farming, piggery, goat rearing and fisheries.
Accelerated Fodder Development Programme
Allocation of ` 300 crore for Accelerated Fodder Development Programme to
benefit farmers in 25,000 villages.
National Mission for Sustainable Agriculture
Government to promote organic farming methods, combining modern technology
with traditional farming practices.
Agriculture Credit
Credit flow for farmers raised from ` 3,75,000 crore to ` 4,75,000 crore in
2011-12.
Interest subvention proposed to be enhanced from 2 per cent to 3 per cent for
providing short-term crop loans to farmers who repay their crop loan on time.
In view of enhanced target for flow of agriculture credit, capital base of NABARD
to be strengthened by ` 3,000 crore in phased manner.
6
` 10,000 crore to be contributed to NABARDs Short-term Rural Credit fund for
2011-12.
Mega Food Parks
Approval being given to set up 15 more Mega Food Parks during 2011-12.
Storage Capacity and Cold Chains
Augmentation of storage capacity through private entrepreneurs and warehousing
corporations has been fast tracked.
Capital investment in creation of modern storage capacity will be eligible for
viability gap funding of the Finance Ministry.
Agriculture Produce Marketing Act
In view of recent episode of inflation, need for State Governments to review and
enforce a reformed Agriculture Produce Marketing Act.
Infrastructure and Industry
Allocation of ` 2,14,000 crore for infrastructure in 2011-12. This is an increase
of 23.3 per cent over 2010-11. This also amounts to 48.5 per cent of total plan
allocation.
Government to come up with a comprehensive policy for further developing
PPP projects.
IIFCL to achieve cummulative disbursement target of ` 20,000 crore by
March 31, 2011 and ` 25,000 crore by March 31, 2012.
Under take out financing scheme, seven projects sanctioned with debt of
` 1,500 crore. Another ` 5,000 crore will be sanctioned during 2011-12.
To boost infrastructure development, tax free bonds of ` 30,000 crore proposed
to be issued by Government undertakings during 2011-12.
National Manufacturing Policy
Share of manufacturing in GDP expected to grow from about 16 per cent to
25 per cent over a period of 10 years. Government will come out with a
manufacturing policy.
Two Committees set up for greater transparency and accountability in procurement
policy; and for allocation, pricing and utilisation of natural resources.
Issues relating to reconciliation of environmental concern from various
departmental activities including those related to infrastructure and mining to be
considered by a Group of Ministers.
National Mission for hybrid and electric vehicle to be launched.
7
Financial Assistance to be made available for metro projects in Delhi, Mumbai,
Bengaluru, Kolkata and Chennai.
Capital investment in fertiliser production proposed to be included as an
infrastructure sub-sector.
Exports
Of 23 suggestions made by Task Force on Transaction Cost, constituted by the
Department of Commerce, 21 suggestions already implemented. Action to be
taken on the remaining two suggestions. Transaction Cost of ` 2,100 crore will
thus be mitigated.
Self assessment to be introduced in Customs to modernize the Customs
administration.
Proposal to introduce scheme for refund of taxes paid on services used for export
of goods.
Mega Cluster Scheme to be extended for leather products. Seven mega leather
clusters to be set up during 2011-12.
Jodhpur to be included for the development of a handicraft mega cluster.
BLACK MONEY
Five fold strategy to be put into operation to deal with the problem of generation
and circulation of black money.
Membership of various international fora engaged in anti money laundering,
Financial integrity and Economic development, Exchange of information for tax
purposes and transparency, secured.
Various Tax Information Exchange Agreements (TIEA) and Double Taxation
Avoidance Agreements (DTAA) concluded. Foreign Tax Division of CBDT has
been strengthened to effectively handle increase in tax information exchange
and transfer pricing issues.
Enforcement Directorate strengthened three fold to handle increased number of
cases registered under amended Money Laundering Legislation.
Finance Ministry has commissioned study on unaccounted income and wealth
held within and outside the country.
Comprehensive national policy to be announced in near future to strengthen
controls over prevention of trafficking on narcotic drugs.
STRENGTHENING INCLUSION
National Food Security Bill (NFSB) to be introduced in the Parliament during
the course of this year.
Allocation for social sector in 2011-12 (` 1,60,887 crore) increased by 17 per
cent over current year. It amounts to 36.4 per cent of total plan allocation.
8
Bharat Nirman
Allocation for Bharat Nirman programme proposed to be increased by ` 10,000
crore from the current year to ` 58,000 crore in 2011-12.
Plan to provide Rural Broadband Connectivity to all 2,50,000 Panchayats in the
country in three years.
MGNREGA
In pursuance of last years budget announcement to provide a real wage of ` 100
per day, the Government has decided to index the wage rates notified under the
MGNREGA to the Consumer Price Index for Agricultural Labour. The enhanced
wage rates have been notified by the Ministry of Rural Development on
January 14, 2011.
From 1
st
April, 2011, remuneration of Anganwadi workers increased from ` 1,500
per month to ` 3,000 per month and for Anganwadi helpers from ` 750 per month
to ` 1,500 per month.
Scheduled Castes and Tribal Sub-plan
Specific allocation earmarked towards Schedule Castes Sub-plan and Tribal
Sub-plan in the Budget.
Allocation for primitive Tribal groups increased from ` 185 crore in 2010-11 to
` 244 crore in 2011-12.
Education
Allocation for education increased by 24 per cent over current year.
Sarva Shiksha Abhiyan
` 21,000 crore allocated, which is 40 per cent higher than Budget for 2010-11.
Pre-matric scholarship scheme to be introduced for needy SC/ST students studying
in classes IX and X.
National Knowledge Network
Connectivity to all 1,500 institutions of Higher Learning and Research through
optical fiber backbone to be provided by March, 2012.
Innovations
National Innovation Council set up to prepare road map for innovations in India.
Special grant provided to various universities and academic institutions to
recognise excellence.
9
Skill Development
Additional ` 500 crore proposed to be provided for National Skill Development
Fund during the next year.
An international award with prize money of ` 1 crore being instituted for promoting
values of universal brotherhood as part of National celebrations of 150
th
Birth
Anniversary of Gurudev Rabindranath Tagore.
Health
Plan allocations for health stepped-up by 20 per cent.
Scope of Rashtriya Swasthya Bima Yojana to be expanded to widen the coverage.
Financial Inclusion
Target of providing banking facilities to all 73,000 habitations having a population
of over 2,000 to be completed during 2011-2012.
Unorganised sector
Exit norms under co-contributory pension scheme Swavalamban to be relaxed.
Benefit of Government contribution to be extended from three to five years for
all subscribers who enroll during 2010-11 and 2011-12.
Eligibility for pension under Indira Gandhi National Old Age Pension Scheme
for BPL beneficiaries reduced from 65 years of age to 60 years. Those above 80
years of age will get pension of ` 500 per month instead of ` 200 at present.
Environment and Climate Change
Forests
` 200 crore proposed to be allocated for Green India Mission from National
Clean Energy Fund.
Environmental Management
` 200 crore proposed to be allocated for launching Environmental Remediation
Programmes from National Clean Energy Fund.
Cleaning of Rivers and Lakes
Special allocation of ` 200 crore proposed to be provided for clean-up of some
more important lakes and rivers other than Ganga.
Some Other Initiatives
To boost development in North Eastern Region and Special Category States,
allocation for Special Assistance doubled.
` 8,000 crore provided in current year for development needs of Jammu and
Kashmir.
Allocation made in 2011-12 to meet the infrastructure needs for Ladakh
(` 100 crore) and Jammu region (` 150 crore).
10
Allocation under Backward Regions Grant Fund increased by over 35 per cent.
Funds allocated under Integrated Action Plan (IAP) for addressing problems
related to Left Wing extremism affected districts. 60 selected Tribal and backward
districts provided with 100 per cent block grant of ` 25 crore and ` 30 crore per
district during 2010-11 and 2011-12 respectively.
A lump-sum ex-gratia compensation of ` 9 lakh for 100 per cent disability to be
granted for personnel of Defence and Para Military forces discharged from service
on medical ground on account of disability attributable to government service.
Provision of ` 1,64,415 crore, including ` 69,199 crore for capital expenditure to
be made for Defence Services in 2011-12.
To build judicial infrastructure, plan provision for Department of Justice increased
by three fold to ` 1,000 crore.
Census 2011
To enumerate castes other than Schedule Castes and Schedule Tribes in Census
2011, caste to be canvassed as a separate time bound exercise.
IMPROVING GOVERNANCE
UID Mission
From 1
st
October, 2011 ten lakh Aadhaar numbers will be generated per day.
IT Initiatives
Various IT initiatives taken for efficient tax administration. These include
e-filing and e-payment of taxes, adoption of Sevottam concept by CBEC and
CBDT, web based facility for tax payers to track the resolution of refunds and
credit for pre-paid taxes and augmentation of processing capacity.
Under Mission mode projects, funds released to 31 projects received from States/
UTs for computerisation of Commercial taxes. This will allow States to align
with roll out of GST.
Bill to amend the Indian Stamp Act proposed to be introduced shortly.
A new scheme with an outlay of ` 300 crore to be launched to provide assistance
to States to modernise their stamp and registration administration and roll out
e-stamping in all the districts in the next three years.
A new simplified form Sugam to be introduced to reduce the compliance burden
of small tax payers falling within presumptive taxation.
Three more benches of Settlement Commission to be set up to fast track the
disposal of cases.
Steps initiated to reduce litigation and focus attention on high revenue cases.
11
Corruption
Group of Ministers constituted to consider measures for tackling corruption.
Recommendations to be made in a time bound manner.
Performance Monitoring and Evaluation System
In pursuance of recommendations of Second Administrative Reforms
Commission, 62 departments covered under Performance Monitoring and
Evaluation System (PMES) to assess their effectiveness.
TAGUP
Recommendations of Technology Advisory Group for Unique Projects (TAGUP)
submitted and accepted in principle.
BUDGET ESTIMATES 2011-12
Gross Tax receipts are estimated at ` 9,32,440 crore.
Non-tax revenue receipts estimated at ` 1,25,435 crore.
Total expenditure proposed at ` 12,57,729 crore.
Increase of 18.3 per cent in total Plan allocation.
Increase of 10.9 per cent in the Non-plan expenditure.
XI Plan expenditure more than 100 per cent in nominal terms than envisaged for
the Plan period.
Increase of 23 per cent in Plan and Non-plan transfer to States and UTs.
Fiscal Deficit brought down from 5.5 per cent in BE 2010-11 to 5.1 per cent of
GDP in RE 2010-11.
Fiscal Deficit kept at 4.6 per cent of GDP for 2011-12.
Fiscal Deficit to be progressively reduced to 3.5 per cent by 2013-14.
Effective Revenue Deficit estimated at 2.3 per cent of GDP in the Revised
Estimates for 2010-11 and 1.8 per cent for 2011-12.
All subsidy related liabilities brought into fiscal accounting.
Net market borrowing of the Government through dated securities in 2011-12
would be ` 3.43 lakh crore.
Central Government debt estimated at 44.2 per cent of GDP for 2011-12 as against
52.5 per cent recommened by the 13
th
Finance Commission.
12
PART B TAX PROPOSALS
Direct Taxes
Exemption limit for the general category of individual taxpayers enhanced from
` 1,60,000 to ` 1,80,000 giving uniform tax relief of ` 2,000.
Exemption limit enhanced and qualifying age reduced for senior citizens.
Higher exemption limit for Very Senior Citizens, who are 80 years or above.
Current surcharge of 7.5 per cent on domestic companies proposed to be reduced
to 5 per cent.
Rate of Minimum Alternative Tax proposed to be increased from 18 per cent to
18.5 per cent of book profits.
Tax incentives extended to attract foreign funds for financing of infrastructure.
Additional deduction of ` 20,000 for investment in long-term infrastructure bonds
proposed to be extended for one more year.
Lower rate of 15 per cent tax on dividends received by an Indian company from
its foreign subsidiary.
Benefit of investment linked deduction extended to businesses engaged in the
production of fertilisers.
Investment linked deduction to businesses developing affordable housing.
Weighted deduction on payments made to National Laboratories, Universities
and Institutes of Technology to be enhanced to 200 per cent.
System of collection of information from foreign tax jurisdictions to be
strengthened.
A net revenue loss of ` 11,500 crore estimated as a result of proposals.
Indirect Taxes
To stay on course for transition to GST.
Central Excise Duty to be maintained at standard rate of 10 per cent.
Reduction in number of exemptions in Central Excise rate structure.
Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in the
tax net.
Lower rate of Central Excise Duty enhanced from 4 per cent to 5 per cent.
Optional levy on branded garments or made up proposed to be converted into a
mandatory levy at unified rate of 10 per cent.
Peak rate of Custom Duty held at its current level.
13
Agriculture and Related Sectors
Scope of exemptions from Excise Duty enlarged to include equipments needed
for storage and warehouse facilities on agricultural produce.
Basic Custom Duty reduced for specified agricultural machinery from 5 per cent
to 2.5 per cent.
Basic Custom Duty reduced on micro-irrigation equipment from 7.5 per cent
to 5 per cent.
De-oiled rice bran cake to be fully exempted from basic Custom Duty. Export
Duty of 10 per cent to be levied on its export.
Manufacturing Sector
Basic Custom Duty reduced for various items to encourage domestic value
addition vis--vis imports, to remove duty inversion and anomalies and to provide
a level playing field to the domestic industry.
Rate of Export Duty for all types of iron ore enhanced and unified at 20 per cent
ad valorem. Full exemption from Export Duty to iron ore pellets.
Basic Custom Duty on two critical raw materials of cement industry viz. petcoke
and gypsum is proposed to be reduced to 2.5 per cent.
Cash dispensers fully exempt from basic Customs Duty.
Environment
Full exemption from basic Customs Duty and a concessional rate of Central
Excise Duty extended to batteries imported by manufacturers of electrical vehicles.
Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.
Exemption granted from basic custom duty and special CVD to critical
parts/assemblies needed for Hybrid vehicles.
Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into
Hybrid vehicles.
Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted.
Basic Customs Duty on solar lantern reduced from 10 to 5 per cent.
Full exemption from basic Customs Duty to Crude Palm Stearin used in
manufacture of laundry soap.
Full exemption from basic Excise Duty granted to enzyme based preparation for
pre-tanning.
Infrastructure
Parallel Excise Duty exemption for domestic suppliers producing capital goods
needed for expansion of existing mega or ultra mega power projects.
Full exemption from basic Customs Duty to bio-asphalt and specified machinery
for application in the construction of national highways.
14
Other Proposals
Scope of exemptions from basic Customs Duty for work of art and antiquities
extended to apply for exhibition or display in private art galleries open to the
general public.
Exemption from Import Duty for spares and capital goods required for ship repair
units extended to import by ship owners.
Concessional basic Custom Duty of 5 per cent and CVD of 5 per cent available
to newspaper establishments for high speed printing presses extended to mailroom
equipment.
Jumbo rolls of cinematographic film fully exempted from CVD by providing
full exemption from Excise Duty.
Out right concession to factory-built ambulances from Excise Duty.
Relief measures proposed for raw pistachio, bamboo for agarbatti, lactose for
the manufacture of homoeopathic medicines, sanitary napkins, baby and adult
diapers.
Proposals relating to Customs and Central Excise estimated to result in a net
revenue gain of ` 7,300 crore.
Service Tax
Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit
between present regime and its GST successor.
Hotel accommodation in excess of ` 1,000 per day and service provided by air
conditioned restaurants that have license to serve liquor added as new services
for levying Service Tax.
Tax on all services provided by hospitals with 25 or more beds with facility of
central air conditioning.
Service Tax on air travel both domestic and international raised.
Services provided by life insurance companies in the area of investment and
some more legal services proposed to be brought into tax net.
All individual and sole proprietor tax payers with a turn over upto ` 60 lakh freed
from the formalities of audit.
To encourage voluntary compliance the penal provision for Service Tax are being
rationalised. Similar changes being carried out in Central Excise and
Custom laws.
Proposals relating to Service Tax estimated to result in net revenue gain of
` 4,000 crore.
Proposals relating to Direct Taxes estimated to result in a revenue loss of
` 11,500 crore and those related to Indirect Taxes estimated to result in net revenue
gain of ` 11,300 crore.
Overview of the economy
The Indian economy is estimated to grow
robustly in the current financial year with growth in
gross domestic product (GDP) at factor cost at
constant 2004-05 prices (Real GDP) at 8.6 per cent.
This follows a revised growth of 8.0 per cent in 2009-
10 indicating a rapid recovery from the crisis and
consolidation. The decomposition of real GDP in 2010-
11 indicates that growth is estimated to be higher
and relatively broad based across the major sectors/
sub-sectors, namely, agriculture, manufacturing,
constructi on, trade, hotel s, transport and
communication and financing, insurance, real estate
& business services, which together account for a
share of 82.6 per cent of the GDP in 2009-10. Growth
in industries was rapid in the first half of the current
fiscal in terms of national accounts as well as the index
of industrial production (IIP); but there are indications
of deceleration in the recent months, which are more
in the nature of a road bump and not structural. With
robust performance in terms of key indicators like
telecom services, civil aviation and financial services,
there has been a recovery in most services with the
exception of community, social and personal services
in the current fiscal. This has helped nudge the GDP
growth close to the robust levels evidenced prior to
the crisis. External sector developments by and large
remained supportive, financial markets were on even
keel and fiscal consolidation resumed in the current
fiscal(2010-11). Data on agricultural production
indicates a growth revival with productivity gains from
a near normal monsoon. The elevated levels of
inflation as measured by the wholesale price index
(WPI) in the current fiscal was initially driven by food
items reflecting demand supply mismatches; but
exhibited a tendency to spill over into a more
generalized phenomenon. This combination of high
levels of aggregate demand with elevated levels of
inflation (not only in terms of WPI but also in terms of
implicit GDP deflator) created a complex economic
challenge and called for a well calibrated policy stance
to preserve the gains from growth and at the same
time prevent further erosion of purchasing power of
the masses in the near term. Monetary policy stance
reflected the need to arrest engendering of inflation
and together with administrative and fiscal measures,
helped in containing inflation which, barring a late
surge on account of some seasonal items in
December 2010, broadly exhibited a declining trend.
1
MACRO-ECONOMIC FRAMEWORK STATEMENT
With the ripple effects of the global crisis dissipating,
the outlook for the medium term remains bright.
GDP growth
The quarterly real GDP estimates of the Central
Statistics Office (CSO) for the first two quarters
indicated a robust growth of 8.9 per cent each in the
current fiscal. However, subsequent to the revisions
in the levels of growth for 2009-10 by the Quick
Estimates released on January 31, 2011, growth in
2010-11 on a quarterly basis is also likely to be revised.
The CSO in its Quick Estimates for 2009-10 revised
the growth in real GDP to 8.0 per cent (from the earlier
level of 7.4 per cent). This indicated a sharper
economic recovery in 2009-10 from the crisis affected
growth of 6.8 per cent in 2008-09. In its Advance
Estimates, released on February 7, 2011, the CSO
has placed growth in real GDP at 8.6 per cent
indicating the consolidation phase. This level of growth
was composed of a growth of 5.4 per cent in
agriculture, 8.1 per cent in industry and 9.6 per cent
in services.
The composition of the estimated growth in real
GDP for 2010-11 indicated that the major sectors/sub-
sectors with a share of 82.6 per cent in the total grew
year-on-year at higher levels, which reflected the
broad-based nature. Following negative and very low
growth i n 2008-09 and 2009-10 respecti vel y,
agriculture and allied sector has rebounded in the
current fiscal contributing about 9.2 per cent to overall
GDP growth. However, as the level of growth in
agriculture continues to be lower than overall GDP
growth, share of agriculture is estimated to come down
to 14.2 per cent in 2010-11. The headline growth in
services at 9.6 per cent in 2010-11 indicates a decline
from the levels of over 10.0 per cent recorded in the
last 5 years including crisis affected years. However,
the year-on-year growth in the two major components,
namely, trade, hotels, transport and communication
and financing, insurance, real estate and business
services in 2010-11 indicate a real recovery in services
led by the private sector; the deceleration in
community, social and personal services, which
broadly corresponds to Government activities is due
to base effect. Industry is estimated to grow at about
the same levels reflecting a pickup in construction
sector (which is yet to recover to the pre-crisis levels)
and an intra-year mix of high and low growth in
manufacturing. Overall the key sectors/sub-sectors
are estimated to grow at higher levels which indicate
2
a consolidation of growth and are below the pre-crisis
robust levels.
In terms of expenditure method of estimation,
GDP at constant market prices is projected to grow
by 9.7 per cent in 2010-11, which follows a growth of
9.1 per cent in 2009-10 (Quick Estimates). Private
final consumption expenditure that had decelerated
in the last two years is estimated to pick up in the
current fiscal even as Government final consumption
expenditure has decelerated sharply on base effect
and partial withdrawal of the stimulus. A deceleration
year-on-year in gross capital formation owes to the
fact that growth in changes in stock and valuables
sharply decelerated on base effect offsetting the
sizeable pickup in gross fixed capital formation. With
growth in exports at constant prices estimated to grow
almost twice that of imports, the draft of net exports
on overall GDP is likely to be lower. The Quick
Estimates for 2009-10 had indicated that gross
domestic savings rate was 33.7 per cent and
investment rate was 36.5 per cent which, given the
levels of growth in gross fixed capital formation for
the current fiscal, points to similar levels of investment
rate in 2010-11.
Agricultural Production
The Eleventh Five Year Plan had projected an
annual average growth of 4 per cent for the agricultural
sector. The average annual growth in the four years
of the Plan (2007-11) was 2.9 per cent. The lower
levels of growth of agricultural GDP was primarily due
to the fall in the production of agricultural crops such
as oilseeds, cotton, jute and mesta, and sugarcane.
The gross capital formation in agriculture and allied
sectors as a proportion of the agricultural GDP
stagnated around 14 per cent during 2004-05 to 2006-
07. However, there is a marked improvement in this
figure during the current Five Year Plan. The
proportion has increased to 16.03 per cent in 2007-
08 and further to 19.67 per cent i n 2008-09
(provisional) and to 20.30 per cent in 2009-10 (Quick
Estimates).
The production of food grains after reaching a
record level of 234.47 million tonnes in 2008-09
declined to a level of 218.11 million tonnes in 2009-
10. As per the Second Advance Estimates released
by Ministry of Agriculture on February 9, 2011,
production of foodgrains during 2010-11 is estimated
at 232.07 million tonnes compared to 218.11 million
tonnes last year. This is only marginally below the
record production of foodgrains in 2008-09. The
country is likely to achieve record production of wheat
(81.47 million tonnes), pulses (16.51 million tonnes)
and cotton (33.93 million bales of 170 kg. each) this
year. This high level of production has been achieved
despite crop damage due to drought in Bihar,
Jharkhand, Orissa and West Bengal and the effects
of cyclones, unseasonal and heavy rains, and cold
wave and frost conditions in several parts of the
country.
Prices
The year-on-year WPI inflation that started
trending up in the last quarter of 2009-10 continued
through the current fiscal. Food price inflation during
the last financial year was mainly driven by high
inflation in pulses, cereals, and sugar due to bad
monsoon. In spite of having a good monsoon this year,
headline inflation at elevated levels owed to high levels
of food inflation. The financial year 2010-11 started
with a double-digit headline inflation of 11.0 per cent
in April 2010. A series of steps, both administrative
and macroeconomic, were taken to combat the rising
food inflation. After remaining in double digits from
April to July 2010, headline inflation came down to
single digits and stood at 8.8 per cent in August 2010.
Headline inflation in November 2010 was 8.1 per cent;
but the trend reversed and in December 2010 it was
8.4 per cent. The inflation in food articles which had
moderated in November 2010 again jumped to 13.6
per cent in December 2010. The spurt in inflation in
December 2010 could be attributed to supply
bottl enecks especi al l y i n vegetabl es, oni ons,
tomatoes, fruits, milk, eggs, and fish. A sudden spike
in prices of onions during December 2010 was
witnessed on account of damage to the onion crop.
The average inflation in primary articles was reported
at 18 per cent on an average during the period April
2010 to December 2010 as compared to 10 per cent
last year for the same period. Recovery in the
domestic economy led to demand-side pressure on
inflation. The inflationary pressure persists both from
domestic demand and higher global commodity prices
on account of the global recovery. As food has a
higher weight in consumer price indices than in the
WPI, inflation measured by consumer price indices
(CPIs) also remained high as compared to WPI from
November 2008 onwards; this continues through the
current fiscal. In August 2010, inflation in terms of all
price indices had come down to single digit after 15
consecutive months of double-digit inflation. Year-on-
year inflation in the CPI-IW was 9.47 per cent in
December 2010 as compared to 14.97 per cent in
December 2009. On year-on-year basis, inflation in
the CPIs for agriculture workers (CPI-AL) and rural
workers (CPI-RL) was 7.99 per cent and 8.01 per cent
3
respectively in December 2010 as compared to 17.21
and 16.99 per cent respectively in December 2009.
Industry and services
The rapid and strong recovery of the economy
i n 2009-10 owed to the strong growth i n the
manufacturing sector. The Index of Industrial
Production (IIP) grew by 10.5 per cent in 2009-10 as
against a level of 3.2 per cent in 2008-09. In fact, the
IIP was in double digits during November 2009 to
March 2010. There has been some volatility in growth
in the current fiscal with four out of nine months
registering double digits growth and in three months
growth was lower than 5 per cent. This is partly on
account of base effect. As per the data on IIP released
by CSO for December 2010, the index grew by 1.6
per cent and growth year-on-year during April-
December 2010 was placed at 8.6 per cent. The
deceleration on base effect is in the nature of a road
bump and the momentum in growth as evidenced by
deseasonalised measures of IIP growth indicates a
recovery. The manufacturing sector, which has a
weight of 79.35 per cent in the IIP, is the key driver.
Manufacturing output growth has dipped from a peak
of 18 per cent in April 2010 to 1.0 per cent in December
2010, as a result of which IIP growth has also come
down from 16.6 per cent in April 2010 to 1.6 per cent
in December 2010. Despite wide fluctuations, the
AprilDecember 2010 cumulative growth rate has
remai ned at a robust 9.1 per cent for the
manufacturing sector. With a share of 57.8 per cent
in real GDP, the services sector has remained the
key driver of the robust growth process. Indias
services GDP growth has been continuously above
overall GDP growth, pulling up the latter since 1997-
98. Together with a share of 35 per cent in total exports
and a growth of 27.4 per cent therein during the first
half of 2010-11 and a high share in FDI equity inflows,
services sector is important in overall economic activity
including in terms of employment.
External Sector
With robust inflows financing the elevated levels
of current account deficit, the external sector
developments remained supportive of the growth
momentum in the current fiscal. However there are
concerns on the composition of the inflows. Data on
balance of payments available for the first half of the
current fiscal indicated a current account deficit of US
$ 27.9 billion as against a level of US $ 13.3 billion in
April-September 2009. Lower levels of net invisible
surplus at US $ 39.1 billion together with higher trade
deficit levels of US $ 66.9 billion accounted for this
widening. Net capital flows at US$ 36.7 billion in the
first half of 2010-11 were higher as compared to US$
23.0 billion in the first half of 2009-10. The increase
was primarily composed of inflow of portfolio
investment, mainly FIIs, short-term trade credits, and
external commercial borrowings (ECBs). The large
increase, however, was considerably offset by the
moderation in net FDI inflows to India. Notwithstanding
significant increase in net capital inflows, accretion to
reserves during the first half of 2010-11 was lower,
mainly due to more than doubling of current account
deficit over the levels in the first half of 2009-10.
Foreign exchange reserves increased from US$ 252
billion at the end of March 2009 to US$ 279.1 billion
at the end of March 2010, showing a rise of US$ 27.1
billion. During the current fiscal, reserves increased
from US$ 279.6 billion at the end of April 2010 to US$
292.4 billion at the end of November 2010. The
reserves stood at US$ 297.3 billion at the end of
December 2010, showing an increase of US$ 18.2
billion over the end-March 2010 level mainly on
account of valuation changes. During the current
fiscal, the monthly average exchange rate of the rupee
has generally been range bound, moving in the range
of `44-47 per US dollar between April and December
2010. The exchange rate of the rupee depreciated by
1.5 per cent against the US dollar, from ` 44.50 per
US dollar in April 2010 to `45.16 per US dollar in
December 2010. The rupee also depreciated against
other major international currencies such as the pound
sterling (3.2 per cent) and Japanese yen (12.2 per cent) during
the period.
Money, Banking and Capital Markets
In view of rising food inflation and the risk of it
impinging on inflationary expectations alongside the
consolidating recovery, the Reserve Bank adopted a
clear shift in stance from managing the crisis to
managing the recovery and announced the first
phase of exit from the expansionary monetary policy
in the Second Quarter Review of October 2009 by
terminating some sector-specific facilities and
restoring the statutory liquidity ratio (SLR) of
scheduled commercial banks to its pre-crisis level.
As there were clear signs that the recovery was
consolidating, it was felt that main policy instruments
were at levels more consistent with a crisis situation
than with a fast recovering economy and it was
imperative to carry forward the process of exit from
an accommodative policy stance. Taking into account
the above consideration, during 2010-11 the Reserve
Bank of India raised the policy rates six times wherein
the repo and reverse repo rates under LAF have been
increased. Since March 2010, repo rates and reverse
repo rates have been increased cumulatively by 175
4
basis points (bps) and 225 bps, respectively. The repo
rate stands at 6.5 per cent and the reverse repo at
5.5 per cent at present. The cash reserve ratio (CRR)
now stands at 6 per cent of net demand and time
l i abi l i ti es (NDTL) of banks. Thus, i n 2010-11
persistently high inflation above the comfort level of
Reserve Bank together with growth buoyancy ensured
that monetary policy focus remained on containing
inflation and inflationary expectations.
Year-on-year non-food credit growth was up 24
percent at end-December 2010, and financed many
sectors more broadly (from the agriculture rebound
to the 3G spectrum sales and private infrastructure
projects), and the overall credit to GDP ratio rose to
about 47.8 percent. Domestic capital markets
performed well in 2010, primary markets financing
record levels, including the largest ever IPO (for Coal
India), while secondary markets reached new highs.
A surge in foreign institutional inflows, year-on-year,
in the first seven months of the fiscal helped support
the market. Pensions and insurance gained, with life
insurance premium growing nearly 26 percent and
penetration doubling to 5.4 percent of GDP in 2009,
from 2.3 percent in the year 2000. The past year saw
banking deposit growth slow, as real interest rates
were depressed, especially compared to returns in
other fast recovering asset markets (real estate, gold,
and stock markets).
Central Government Finances
With clear evidence of economic recovery in
2009-10 as indicated by the Advance Estimates of
the GDP, the Budget for 2010-11 resumed the path of
fiscal consolidation with a partial exit from the stimulus
measures. As a proportion of the GDP, fiscal deficit
was estimated at 5.5 per cent in the Budget 2010-11
and the Medium Term Fiscal Policy Statement
indicated a further reduction to 4.8 per cent and 4.1
per cent in 2011-12 and 2012-13 respectively. The
fiscal outcome in the first nine months of the current
financial year remained broadly on the consolidation
track chalked out in the Budget. Owing to higher than
estimated revenue from telecom 3G/BWA auctions
and indirect taxes, there has been a 50 per cent
increase in revenue receipts, year-on-year, during the
first nine months of the current fiscal. Thus, there was
headroom for higher levels of expenditure at the given
fiscal deficit targets. With year-on-year growth in total
expenditure in the first nine months of the current fiscal
at 11.2 per cent as against a level of 8.5 per cent
envisaged for the full year in the Budget Estimates
for 2010-11, fiscal and revenue deficits are placed at
`1,71,249 crore and `1,16,309 crore respectively,
during this period, which constituted 44.9 per cent and
42.1 per cent of the Budget Estimates. With nominal
GDP placed at `78,77,947 crore for the year by the
Advance Estimates of the CSO, the revised target for
the current fiscal (2010-11) in terms of the fiscal deficit
to GDP ratio is placed at 5.1 per cent and revenue
deficit at 3.4 per cent in RE 2010-11.
Prospects
The CSOs Advance Estimates of growth in real
GDP at 8.6 per cent for 2010-11 is considered
appropriate as it is based on the trends in indicators
i n the vari ous sectors of the economy. The
deceleration in IIP in December 2010 is largely a
reflection of base effect and there is an underlying
growth momentum on a month-on-month
deseasonalised basis as per the IIP data for December
2010. With a pick up in the key sub-sectors of services,
and assuming a normal monsoon, real GDP is
expected to grow by 9 per cent (+/- 0.25 per cent) in
2011-12. The downside risks to growth estimate are
sub-normal monsoons, a sharp rise in commodity
prices, particularly crude petroleum and the emerging
global economic situation particularly those in
advanced economies in the absence of fiscal stimulus.
Higher growth could accrue from higher capital
formation given the levels of incremental capital output
ratio of 4.1 per cent estimated for the Eleventh Plan
as well as gains in terms of total factor productivity. In
the next five to ten years the former would be important
and once the economy begins to operate close to its
capacity, skill development and innovative activity in
the country are expected to replace savings and
investment rates as effective drivers of GDP growth.
5
Annex - I
MACROECONOMIC FRAMEWORK STATEMENT
(ECONOMIC PERFORMANCE AT A GLANCE)
Sl. Item Absolute value Percentage change
April-December April-December
2009-10 2010-11 2009-10 2010-11
Real Sector
1 GDP at factor cost (Rs. thousand crore)*
a) at current prices 6133
Q
7257
A
16.1
Q
18.3
A
b) at 2004-05 prices 4494
Q
4879
A
8.0
Q
8.6
A
2 Index of Industrial Production ( 1993-94=100) 304.7 331.0 8.6 8.6
3 Wholesale Price Index (2004-05=100) @ 128.8 140.9 1.7 9.4
4 Consumer Price Index: Industrial Workers (2001=100) 160.1 177.7 11.3 11.0
5 Money Supply (M3) (Rs. thousand crore) $ 5285 6202 17.7 17.4
6 Imports at current prices **
a) In Rs. crore 991605 1126513 -12.0 13.6
b) In US $ million 207315 246724 -18.3 19.0
7 Exports at current prices **
a) In Rs. crore 608882 751633 -6.7 23.4
b) In US $ million 127182 164707 -13.8 29.5
8 Trade Deficit (in US$ million) ** -80133 -82017 -24.6 2.4
9 Foreign Exchange Reserves
a) In Rs. crore 1323235 1332353 6.7 0.7
b) In US $ million 283470 297334 10.7 4.9
10 Current Account Balance (In US$ million) (Apr-Sept) -13339 -27881 ... ...
Government Finances #
1 Revenue receipts 389271 584268 3.5 50.1
2 Tax revenue (Net) 307591 391148 -0.8 27.2
3 Non-tax revenue 81680 193120 23.7 136.4
4 Capital receipts (5+6+7) 318269 202584 43.8 -36.3
5 Recovery of loans 3983 8591 33.9 115.7
6 Other receipts 4306 22744 9914.0 428.2
7 Borrowings and other liabilities 309980 171249 42.0 -44.8
8 Total receipts (1+4) 707540 786852 18.5 11.2
9 Non-Plan expenditure (10+12) 497381 536898 16.6 7.9
Of which:
10 Revenue Account 460970 487692 14.2 5.8
Of which:
11 Interest payments 130005 146304 5.1 12.5
12 Capital Account 36411 49206 60.7 35.1
13 Plan expenditure (14+15) 210159 249954 23.0 18.9
Of which:
14 Revenue Account 179555 212885 23.0 18.6
15 Capital Account 30604 37069 23.5 21.1
16 Total expenditure (9+13) 707540 786852 18.5 11.2
17 Revenue expenditure (10+14) 640525 700577 16.5 9.4
18 Capital expenditure (12+15) 67015 86275 41.2 28.7
19 Revenue deficit (17-1) 251254 116309 44.5 -53.7
20 Fiscal deficit {16-(1+5+6)} 309980 171249 42.0 -44.8
21 Primary deficit (20-11) 179975 24945 90.4 -86.1
A-Advance estimates. Q-Quick estimates * Relates to full year.
@ Average of April to December.
$ Data on M3 is the outstanding as on January 1, 2010 for 2009-10 and December 31, 2010 for 2010-11.
** On Customs basis; comparison for current year is on provisional over revised basis.
# Figures as reported by Controller General of Accounts, Department of Expenditure, Ministry of Finance.
7
MEDIUM TERM FISCAL POLICY STATEMENT
A. FISCAL INDICATORS ROLLING TARGETS AS PERCENTAGE OF GDP
(at current market prices)
Revised Budget Targets for
Estimates Estimates
2010-11 2011-12 2012-13 2013-14
1. Revenue Deficit 3.4 3.4 2.7 2.1
2. Fiscal Deficit 5.1 4.6 4.1 3.5
3. Gross Tax Revenue 10.0 10.4 10.8 11.3
4. Total outstanding liabilities
at the end of the year 45.3 44.2 43.1 41.5
Notes:
1. GDP is the Gross Domestic Product at current market prices as per new series from 2004-05.
2. Total outstanding liabilities include external public debt at current exchange rates. For projections, constant exchange
rates have been assumed. Liabilities do not include part of NSSF and total MSS liabilities which are not used for financing
Central Government deficit.
3. Comparison with the Thirteenth Finance Commission roadmap is shown in annexure I.
1. The performance on select fiscal indicators
during the current financial year and the rolling targets
for ensuing financial year presented above, show
improvement over the commitments made in the
Budget 2010-11.
2. During the first half of the current financial year,
with higher receipts from auction proceeds of 3-G and
BWA spectrum, it was evident that the revenue
receipts of the government would exceed significantly
over the estimated level in BE 2010-11. At the same
time, there were signs of higher than estimated
buoyancy in tax collection resulting in higher growth
in tax revenue receipts as well. These factors brought
in two options before the government first to over
perform on correction in fiscal deficit and; second to
utilize additional resources by providing higher outlays
for priority sectors but still remain within the mandated
deficit level.
3. In a developing country like India, the need for
further investment in physical and social infrastructure
is immense. However, the provisions in Budget for
the same have to factor in the availability of resources.
It was in this context that additional allocations for
expenditure in 2010-11 were made without exceeding
the fiscal deficit target of 5.5 per cent of GDP. With
the availability of higher resources during the year
(especially from 3G and BWA spectrum auctions), the
government opted for the second option and decided
to increase allocation for certain sectors which include
rural infrastructure (`10,000 crore for PMGSY);
implementation of Right to Education Act (`4,000
crore); Plan Assistance to States (`6,379 crore) and
Recapitalization of Public Sector Banks (`3,657 crore).
However, even with significant increase in overall
expenditure, the government has not deviated from
the committed path of fiscal consolidation. Higher
revenue receipts coupled with higher nominal growth
in GDP have helped the government in reducing the
fiscal deficit as percentage of GDP to 5.1 per cent in
RE 2010-11.
4. This reduction in fiscal deficit may be seen in
the context of change in policy of the government
introduced in the current financial year not to issue
Government securities in lieu of cash subsidies to oil
and fertiliser companies. It may be recalled that
effective fiscal deficit (including securities issued in
lieu of subsidies to oil and fertiliser companies) had
gone up to 7.8 per cent of GDP in the crisis year of
2008-09. Revenue deficit on the same analogy has
come down from 6.3 per cent of GDP in 2008-09 to
3.4 per cent in RE 2010-11. From the current financial
year, new fiscal indicator, namely, effective revenue
deficit has been depicted (details of which are
explained in the Fiscal Policy Strategy Statement). This
indicator indicates how much of imbalance in revenue
account is attributed to grants for creation of capital
assets. In the RE 2010-11, effective revenue deficit is
estimated at 2.3 per cent of GDP.
7
8
5. Gross tax revenue receipts in BE 2010-11 were
estimated to grow at 19.6 per cent from actuals of
2009-10 and are now estimated to grow at 26 per
cent in RE 2010-11. However, with upward revision of
GDP data for 2009-10 and higher than estimated
nominal growth in GDP during 2010-11, tax to GDP
ratio shows a decline from estimated level of 10.8 per
cent in BE 2010-11 (as per earlier GDP number) to
10.0 per cent in RE 2010-11. In the revised series of
GDP data with effect from 2004-05, gross tax revenue
as percentage of GDP reached peak of 11.9 per cent
in 2007-08 and had gradually declined to 9.5 per cent
in 2009-10. This reduction in tax to GDP ratio was the
outcome of the adverse impact of global economic
crisis on the Indian economy and related fiscal
measures (reduction in taxes and duties) undertaken
during the period 2008-09 and 2009-10. With partial
withdrawal of stimulus measures during 2010-11, the
increase in tax to GDP ratio from 9.5 per cent in 2009-
10 to 10.0 per cent in RE 2010-11 demonstrates that
the recovery process has firmly set in and one can
look forward for further accelerated improvement in
this ratio in coming years in the medium term.
6. Non-tax revenue has significantly exceeded the
budget estimates of `1,48,117 crore to `2,20,148 crore
in RE 2010-11. This is primarily due to higher than
estimated receipts from auction of 3-G and BWA
spectrum. After factoring in lower than estimated
transfer of surplus from the Reserve Bank of India,
di vi dend recei pts from vari ous Publ i c Sector
Undertakings (PSUs) and Financial Institutions (FIs)
have increased in RE 2010-11 from the estimated level
of BE 2010-11.
7. Disinvestment proceeds which form a significant
part of non-debt capital receipts were estimated at
`40,000 crore in BE 2010-11. However, taking into
account the increase in other sources of revenue, the
disinvestment programme during the year 2010-11
has been modified and accordingly receipts from
disinvestments in PSUs have been reduced to `22,144
crore in RE 2010-11. After factoring in recoveries of
loans and advances, the total non-debt capital receipts
are estimated to reduce from `45,129 crore in BE
2010-11 to `31,745 crore in RE 2010-11.
8. With higher receipts from other deficit financing
sources, the overall net market borrowings of the
government have been reduced by `10,000 crore in
RE 2010-11 from the estimated level of `3,45,010
crore in BE 2010-11. The indicated level of borrowing
will also aid in better cash management in the first
quarter of ensuing year when the redemptions of
existing debt stock is of higher level.
Fiscal outlook for 2011-12 to 2013-14
9. Conti nui ng wi th the process of fi scal
consolidation, which resumed in 2010-11 after a pause
of two difficult financial years, the fiscal policy of 2011-
12 is continued to be steered by the Governments
commitment in Medium Term Fiscal Policy Statement
(MTFP) statement presented along with Budget 2010-
11. Fiscal deficit which was committed to be brought
down to 4.8 per cent of GDP, i n l i ne wi th
th
Finance commission
(FC), has actually been estimated to further improve
to 4.6 per cent in BE 2011-12. This re-emphasizes
the Governments commitment to carry on the process
of fiscal consolidation more vigorously in the coming
years. Fiscal deficit target for 2012-13 has been
estimated at 4.1 per cent of GDP and 3.5 per cent in
2013-14. Though the target for 2012-13 is a slight
improvement over the recommended roadmap of the
13
th
FC (4.2 per cent), target for 2013-14 is less
ambitious when compared to 3.0 per cent. This is
mainly on account of lower disinvestment proceeds
assumed in the projection when compared to the 13
th
FC recommendations wherein non debt capital
receipts were assumed at 0.9 per cent of GDP for
2013-14 whereas in this Statement it is assumed at
0.3 per cent of GDP. In the first two years of the 13
th
FC award peri od i .e. 2010-11 and 2011-12,
government has strived for improving upon the
recommended level of fiscal deficit. While the
suggested roadmap of the 13
th
FC puts fiscal deficit
at 5.7 per cent and 4.8 per cent of GDP for 2010-11
and 2011-12 respectively, it has now been estimated
at 5.1 per cent and 4.6 per cent respectively. This
better than recommended performance on fiscal
deficit side, coupled with higher GDP, would help the
government in reducing the debt as percentage of
GDP even faster and well below the target set in the
13
th
FC.
10. The recommended debt target for terminal year
(2014-15) of the 13th FC award period which is 44.8
per cent of GDP is estimated to be achieved in the
year 2011-12 itself, wherein it is estimated at 44.2 per
cent of GDP. With the above projections of fiscal deficit
and assuming that the net increment in liability would
not be more than the fiscal deficit of respective years,
debt as percentage of GDP is projected to reduce to
43.1 per cent and 41.5 per cent in 2012-13 and 2013-
14 respectively. Total outstanding liabilities indicated
above include external public debt at current exchange
rates and do not include part of National Small Savings
Fund (NSSF) and total Market Stabilisation Scheme
(MSS) liabilities which are not used for financing
Central Government deficit. It however includes
9
liabilities on account of 14-days treasury bills which
would be excluded along with Central Government
Loans to States while consolidating the General
Government debt and liabilities.
11. Revenue deficit has been estimated at 3.4 per
cent of GDP in BE 2011-12. This is at the same level
as estimated in RE 2010-11. However, this non-
reduction in revenue deficit as percentage of GDP
when compared to RE 2010-11 may be seen in the
context of windfall gain in revenue receipts through
3-G and BWA spectrum auction during 2010-11.
Contribution from this component, which was one off
receipt, in correction of revenue deficit during 2010-
11 was of the order of 1.3 per cent of GDP. Revenue
deficit is further estimated to decline to 2.7 per cent
of GDP in 2012-13 and 2.1 per cent in 2013-14. As a
significant proportion of revenue expenditure is being
provided as grants for creation of capital assets, it
would be pertinent to look at the effective revenue
deficit of the government. The effective revenue
deficit, after factoring in the above mentioned grant
component in the revenue account, is estimated at
1.8 per cent of GDP in BE 2011-12. It is further
projected to decline to 1.1 per cent in 2012-13 and
0.5 per cent in 2013-14. It is this component of
imbalance in revenue account which needs to be
addressed in right earnest - through expenditure
management and revenue augmentation.
12. Gross tax revenue is estimated to increase from
10.0 per cent of GDP in RE 2010-11 to 10.4 per cent
in BE 2011-12 (reflecting growth of 18.5 per cent over
RE 2010-11), which is however still lower than 11.9
per cent of GDP achieved during 2007-08. With
economy reverting back to the path of trend growth
rate, it would be possible to get back to the achieved
level of tax to GDP ratio. In the medium term targets,
gross tax collection as percentage of GDP is projected
at 10.8 per cent in 2012-13 and 11.3 per cent in 2013-
14.
13. The fiscal consolidation roadmap enumerated
in this Statement, is designed with a conscious effort
to bring down total expenditure of the government as
percentage of GDP to the pre-crisis level i.e. of 2007-
08. Including issuance of securities in lieu of subsidies
and securities issued to nationalized banks, total
expenditure of the government during 2007-08 was
15.9 per cent of GDP. This went up to 17.3 per cent in
2008-09 (inclusive of securities issued in lieu of
subsidies) and has declined to 15.4 per cent in RE
2010-11. With re-prioritization of expenditure towards
developmental side and curtailing the growth in non-
developmental expenditure, the total expenditure is
estimated to be brought down to 14 per cent of GDP
in BE 2011-12. In the medium term projection, it is
estimated to further decline to 13.5 per cent of GDP
in 2012-13 and 13.0 per cent in 2013-14.
B. ASSUMPTIONS UNDERLYING THE FISCAL
INDICATORS
1. Revenue Receipts
(a) Tax-Revenue
14. During the period 2004-05 to 2007-08, gross tax
revenue increased from 9.4 per cent of GDP to 11.9
per cent. However, due to the global economic crisis
and its adverse impact on Indian economy, this
percentage has declined to 9.5 per cent in 2009-10.
With economy returning back to the path of trend
growth rate, it should be the endeavour of the
government to restore the tax buoyancy to the pre
crisis year level. Gross Tax revenue is estimated to
improve from 10 per cent of GDP in RE 2010-11 to
10.4 per cent in BE 2011-12. This percentage is still
lower than 10.8 per cent which was the tax to GDP
ratio in the crisis year of 2008-09. With the introduction
of Direct Tax Act in 2011-12 and likely introduction of
Goods and Services Tax, the endeavour is to set right
the reduction in tax to GDP ratio witnessed during the
crisis period. In the medium term outlook, it is
projected to improve from 10.4 per cent in BE 2011-
12 to 10.8 per cent in 2012-13 and further to 11.3 per
cent in 2013-14. This, however, is still lower than 11.9
per cent achi eved duri ng 2007-08. These
improvements are assumed with projected higher
growth in the economy for 2011-12, 2012-13 and
2013-14. Any slippage in the growth forecast would
impact these projections.
15. Direct tax collections, which reached a peak of
6.3 per cent of GDP in 2007-08, are estimated at 5.9
per cent of GDP in BE 2011-12 up from 5.7 per cent
in RE 2010-11. It is estimated to grow at 19.4 per
cent in BE 2011-12 over RE 2010-11. The estimated
growth rate is in line with the performance in direct
tax collection during the trend growth period of 2003-
04 to 2007-08. The compounded annual growth rate
for major components of direct tax during the above
mentioned period was about 29 per cent. With the
economy showing swift and broad based recovery and
likely continuance of the higher rate of growth in the
medium term, direct tax collections should reach the
pre crisis year level. With the implementation of Direct
Taxes code (DTC) from 2012-13, direct tax collection
as percentage of GDP is projected to improve from
5.9 per cent in BE 2011-12 to 6.2 per cent in 2012-13
and further to 6.5 per cent in 2013-14. The year on
10
year growth rate assumed for the above projections
are 19.5 per cent and 19 per cent for 2012-13 and
2013-14 respectively. It may be recalled that in a
prelude to introduction of DTC, during 2010-11,
income slabs were increased for the prevailing tax
rate structure and rate of surcharge had been reduced
on Corporation Tax. This had helped in improving the
compliance level. With widening of tax base and
improved compliance, the tax collections tend to show
higher growth. The current year trends point in this
direction. Taking forward the process of reduction in
surcharges, rate of surcharge on Corporation Tax has
been proposed to be further reduced during 2011-12.
16. Indian economy has shown its characteristic
resilience in the aftermath of global economic crisis.
The recovery has become broad based and this is
evident from the growth in indirect tax receipts in the
current year. After factoring in the effect of partial
rollback of stimulus measures, BE 2010-11 was
estimated to grow at 27.3 per cent. Latest trends in
2010-11 indicate that the growth in indirect tax receipts
will be much higher and RE 2010-11 is estimated to
grow at 38.2 per cent. With this accelerated revival in
economy, indirect tax receipts as percentage of GDP
has gone up from 3.8 per cent in 2009-10 to 4.3 per
cent in RE 2010-11. The implementation of GST would
help in further improving the compliance and thereby
will result in improvement in overall indirect tax
collection. With the assumption that the economy
would continue to register the higher growth trajectory,
it is projected that the indirect tax receipts as
percentage of GDP would increase to 4.5 per cent in
BE 2011-12 and to 4.7 per cent in 2013-14.
17. Assignment to States and net Tax Revenue of
Centre in B.E.2011-12 are placed at `2,63,458 crore
and `6,64,457 crore respectively after factoring in the
th
FC. With gradual
reduction in surcharges, the shareable pool as
proportion of gross tax revenue has increased in BE
2011-12 when compared to BE 2010-11. Therefore,
net tax revenue to Centre is estimated to decline from
71.5 per cent in BE 2010-11 to 71.3 per cent in BE
2011-12.
18. The fiscal indicators shown in Table in paragraph
A for BE 2010-11 are based on new Budget proposals.
(b) Non-tax-revenue
19. Non-tax revenue (NTR) which was estimated
at `1,48,118 crore in the B.E. 2010-11 has gone up
significantly due to higher receipts from the auction
of 3G and BWA spectrum. It is estimated at `2,20,148
crore in RE 2010-11. This one time receipt had helped
the government in containing the fiscal deficit within
the mandated level even with higher outlays for priority
sector expenditure. However, absence of any such
receipts in 2011-12, brings the non tax revenue
estimates back to the trend level. It is estimated at
`1,25,435 crore. Major proportion of this receipt is
estimated from dividends and profits from PSUs and
FIs along with transfer of surplus from the RBI. This
component of revenue being highly inelastic,
government has to devise mechanisms to increase
receipts from non tax revenue. One of the items could
be efficient pricing of natural resources which may
bring in regular flow of revenue for the government.
With the existing policy, it is estimated that non tax
revenue as percentage of GDP would decline from
1.4 per cent in BE 2011-12 to 1.2 per cent in 2012-13
and 2013-14. In absolute terms, it is estimated to grow
at 10 per cent in 2012-13 and 7 per cent in 2013-14.
There may be a spike wherein some of the one off
items may bring in more revenue for the government.
(c) Devolution to States
20. 13
th
FC has recommended for increasing the
States share in net proceeds of Union taxes from
30.5% to 32% during its award period 2010-2015. It
has also recommended increase in the indicative
ceiling on total transfers from Centre to the States on
the revenue account from 38% to 39.5%. This has
impacted the availability of resources for the Central
Government.
2. Capital receipts
(a) Recovery of loans and advances
21. Net recovery of loans from the States have
declined during the 12
th
FC award period on account
of gradual disintermediation by Central Government
and the debt consolidation and debt waiver scheme.
However, with the passage of 12
th
FC award period,
the debt waiver scheme will not be in operation
anymore and therefore the recovery of loans from
States have shown an increasing trend.
22. The repayment of loans from Central PSEs is
also impacted on account of defaults from PSEs that
are either sick or under revival through BIFR. The
waiver of interest or write off of loans of sick PSUs
has reduced the potential future receipts. Recovery
of loans and advances is estimated at `15,020 crore
in B.E.2011-12. The higher estimated receipt is
primarily on account of recovery of short term loans
given to the Food Corporation of India (` 5,000 crore)
for its procurement operation. For 2012-13 and 2013-
14, this component of receipt is estimated to be flat
at `10,000 crore as the government would not
11
encourage net lending (except for the back to back
arrangement made for external loans to States).
(b) Other non-debt capital receipts
23. Disinvestments in Government PSUs are main
source of recei pts under thi s head. Nati onal
Investment Fund was created to hold disinvestment
proceeds and investment of accumulation under the
Fund by the fund managers used to give returns as
non tax revenue of the government till 2008-09. During
2009-10, Government had decided to use the
disinvestment proceeds received during 2009-10 to
2011-12 for the purpose of financing social sector
programmes which are creating capital assets.
Accordingly, disinvestment receipts are being used
to partly meet expenditure on select flagship
programmes related to Rural Employment, Rural
Housing, Rural Electrification, Irrigation, Urban
Infrastructure and Reforms in power sector. In the year
2010-11, government set up an ambitious target of
`40,000 crore receipts from disinvestments. With
successful completion of one of the largest IPO related
to Coal India, the target was expected to be achieved
during the current year. However, on review of latest
trends in receipts from other sources of revenue of
the government, disinvestment programme during
2010-11 has been moderated and the RE 2010-11 is
estimated at `22,144 crore. In BE 2011-12, this is
estimated at `40,000 crore. Also, the returns from the
investment made earlier through National Investment
Fund would continue to be employed to finance
selected social sector schemes which promote
education, health and employment and to meet capital
investment requirement of profitable and revivable
CPSEs.
24. During the year 2012-13, as per the existing
decision of the Government, disinvestment proceeds
would not be available for financing of programme
expenditure and only the returns made from earlier
and future investments could be used for financing
select social sector programmes. However, as
recommended by the 13
th
FC, the medium term
outlook in this Statement assumes that disinvestment
proceeds would continue to be used for financing
government expenditure in 2012-13 and 2013-14 as
well. Receipts under this component have been
projected at `30,000 crore and `25,000 crore in 2012-
13 and 2013-14 respectively. This amounts to 0.3 per
cent and 0.2 per cent of GDP for respective years
much lower than the estimated receipts by the 13
th
FC. This receipt would help government to finance
developmental expenditure within the fiscal deficit
levels in the medium term framework. However,
discontinuance in use of disinvestment proceeds for
financing programme expenditure would lead to higher
than projected fiscal deficit in 2012-13 and 2013-14,
unless the government is able to achieve higher
buoyoncy in tax and non tax revenues. Depending
on the capital market condition and prevailing
macroeconomic parameters in the economy, both
upward and downward risks are associated with the
successful completion of the projected level of
disinvestment programme in respective years.
(c) Borrowings Public Debt and Other
Liabilities
25. In the Budget 2010-11, it was announced that
the Government will bring out a status paper giving
detailed analysis of the governments debt situation
and a roadmap for curtailing the overall public debt. It
was also announced that it would be followed by an
Annual Report on this subject. As a follow up of the
above announcement, a paper Government Debt
Status and Road Ahead was brought out in November
2010. Of the overall Central Government debt and
liabilities, about 92 per cent is domestic debt and only
8 per cent is external debt. Presently, deficit of the
government is financed largely through dated
securities at market determined interest rates which
are raised through auction. Other sources of financing
for the government include Securities issued to
National Small Savings Fund (NSSF), external debt
from multilateral and bilateral agencies, short term
bills, net accretion in public account of the government,
etc.
26. Duri ng 2010-11, the market borrowi ng
programme has been reduced by `10,000 crore from
the estimated level in the Budget Estimates. The
announced borrowing calendar has been largely
completed except the balance ` 10,000 crore which
may not be raised during the remaining part of the
financial year. The change in monetary policy stance
and prevailing liquidity condition has resulted in
hardening of yield during the current financial year.
The weighted average yield in primary auction of dated
securities in 2011-12 has gone up from 7.2 per cent
in 2009-10 to 7.9 per cent. In the year, 2011-12 the
Government would finance about 82 per cent of deficit
through dated securities at market determined interest
rates. The net borrowings from the open market in
2011-12 have been estimated after factoring in private
sector requirements. It has been estimated to be
reduced from 5.0 per cent of GDP in BE 2010-11 to
3.8 per cent in BE 2011-12. As a proportion of overall
deposits with the banking system also the estimated
market borrowing will show a significant decline in BE
12
2011-12 when compared to BE 2010-11. The details
on other sources of financing of deficit are shown in
the Receipts Budget.
27. In the debt paper (November, 2010), it had been
expl ai ned that whi l e accounti ng for Central
Government debt and liabilities, the amount not used
for financing Central Government deficit should be
taken out for truly depicting Governments liability. The
component of NSSF which are invested as State
Governments securities has been excluded for the
purpose of calculating Central Governments liabilities.
Debt raised under Market Stabilisation Scheme (MSS)
which are sequestered in a separate account in the
RBI, are also not availabe for financing of fiscal deficit.
Hence MSS balances are adjusted while arriving at
the debt and liabilites of the Government. With these
adjustments from the shown liabilities in the Receipts
Budget Annex-5A, along with external debt at current
exchange rate, the estimated debt to GDP ratio for
Central Government would be 45.3 per cent in RE
2010-11 and 44.2 per cent in BE 2011-12 respectively.
This marked improvement from the earlier reported
data on debt has to be seen in the context of revision
in GDP data with a new series effective from 2004-05
as well as higher than earlier estimated growth in
2009-10 and 2010-11. With the projected level of fiscal
deficit of 4.1 per cent of GDP in 2012-13 and 3.5 per
cent of GDP in 2013-14, the estimated debt to GDP
ratio would be 43.1 per cent and 41.5 per cent
respectively. These estimates show that the debt to
GDP ratio in 2011-12 itself will be lower than the 13th
FC recommended level of 44.8 per cent for the
terminal year 2014-15.
3. Total expenditure
(A) Revenue account
(i) Plan Revenue expenditure
28. Starting with 2008-09 and then in 2009-10, the
government had to step up pl an expendi ture
significantly for boosting demand and investment in
infrastructure sector. This decision was part of the
fiscal stimuli measures provided by the Government
to minimise the impact of the global slowdown on the
Indian economy. The fact that Indian economy grew
at 8 per cent in 2009-10 shows that the policy of
increasing government plan expenditure has aided
the quick and broad based revival of the economy.
Plan revenue expenditure has increased from
`1,73,572 crore in 2007-08 to ` 3,26,928 crore in
R.E.2010-11. This shows compounded annual growth
of 23.5 per cent during 2008-09 to 2010-11. Plan
revenue expenditure is further estimated at `3,63,603
crore in BE 2011-12 reflecting growth of 11.2 per cent
over RE 2010-11.
29. With these allocations, the overall provision for
plan expenditure would exceed the projected
expenditure outlay in the Eleventh Plan in nominal
terms. This may be seen in the context of earlier
performance during Ninth and Tenth Plan, when actual
expenditure was only about 84 per cent of the
projected outlays. The significant increase in
allocations brings in the issue of transforming outlays
into outcomes, particularly outcomes which could be
monitored from a base scenario in the medium term.
(ii) Non Plan Revenue expenditure
30. Non-plan revenue expenditure which mainly
consists of salary, pension, defence services, interest
payment and statutory grants to States, has risen
sharply during the crisis year period of 2008-09 and
2009-10. From 9.6 per cent of GDP in 2006-07, it has
gone up to 11.0 per cent in 2009-10. This level of
growth in non-plan expenditure is found to be non
sustainable and current sources of government
revenues would not be able to fully finance it; thereby
necessitating use of borrowed resources for financing
this component. With lower estimated growth in salary
and pension related expenditure vis a vis GDP and
completion of Agricultural Debt Waiver and Debt Relief
Scheme for farmers, the growth in non-plan revenue
expenditure has been moderated and the overall
allocation has been brought down accordingly in BE
2011-12 to 8.2 per cent of GDP. This sharp reduction
as percentage of GDP may also be seen in the context
of very high rate of nominal growth in GDP witnessed
during 2010-11. The challenge however remains to
adhere to these allocations and not to resort to
substantive augmentation through Supplementary
Demands for Grants.
31. In absolute terms non-plan revenue expenditure
has been estimated to increase from `7,26,749 crore
in R.E.2010-11 to ` 7,33,559 crores in B.E.2011-12
reflecting growth of 1 per cent. The major items of
non-plan revenue expenditure are detailed below.
(a) Interest payments
32. During the period 2004-05 to 2007-08, fiscal
consolidation aided with lower interest rate regime had
helped the government in bringing down interest
payment as percentage of net tax revenue of Central
Government to 38.8 per cent in 2007-08 from the high
of 56.5 per cent in 2004-05. However, higher fiscal
deficit during the crisis period, resulted in higher
13
interest outgo which coupled with moderation in net
tax revenue, has increased the interest payment as
proportion of net tax revenue to Centre to 46.7 per
cent i n 2009-10. Wi th resumpti on of fi scal
consolidation path by the Central Government, this
percentage is estimated to improve to 40.3 per cent
in BE 2011-12. This indicates that any slippage on
fiscal front even for one or two financial years may
lead to serious crowding out of resources for
developmental expenditure in future as interest
payment will elbow out other expenditures from
governments net tax revenue. In the medium term
outlook, this ratio is projected to further improve to
38.4 per cent and 36.1 per cent in 2012-13 and 2013-
14 respectively. Interest payment as percentage of
GDP is estimated to decline from 3.3 per cent in 2009-
10 to 3.0 per cent in BE 2011-12 and 2.9 per cent by
2013-14. The risk associated with the above
projections are significant change in interest rate in
the coming years or larger than projected fiscal deficit
for the corresponding period.
(b) Defence Services
33. Defence Services expenditure in revenue
account is estimated to marginally increase from
`90,669 crore in 2009-10 to `90,748 crore in RE 2010-
11. The lower growth in this component is due to the
additional requirements on account of implementation
of the Si xth Central Pay Commi ssi on
recommendations during 2009-10. It is estimated to
increase to `95,217 crore in BE 2011-12 reflecting a
growth of 4.9 per cent over RE 2010-11. As percentage
of GDP, this component is estimated to reduce from
1.4 per cent in 2009-10 to 1.1 per cent in B.E. 2011-
12.
(c) Major subsidies
34. It may be recalled that the expenditure on
subsidies for food, fertilisers and petroleum products
increased substantially during 2008-09. After including
`95,942 crore of Special Securities issued to oil and
fertiliser companies in lieu of cash subsidies, total
expenditure on subsidies on these three items
increased to `2,19,582 crore amounting to about 40
per cent of revenue receipts of the Government and
about 4 per cent of GDP. This level of subsidy payment
was certainly not sustainable and the Government
undertook certain measures like introduction of
nutrient based subsidy mechanism for fertilisers,
deregulation of petrol pricing etc. Details of these
measures are given in the Fiscal Policy Strategy
Statement. These measures have helped in reducing
the expenditure on major subsidies as percentage of
GDP to 1.5 per cent in BE 2011-12 and it is projected
to decline to 1.3 per cent by 2013-14. The medium
term projection for subsidies has factored in 5 per
cent year on year increase in absolute terms. The
policy on subsidies has to be reworked along with
reforms in delivery mechanism in order to not exceed
the above mentioned projections. Any slippage on this
account would impact the future fiscal consolidation
process.
35. Government has firmly established the practice
of providing petroleum and fertiliser subsidy in cash
instead of securities. Government would like to
continue with this practice of extending government
subsidy in cash. This is a major step towards bringing
in all subsidy related liabilities into Governments fiscal
accounting and overall correction in subsidy outgo
may be seen in this context.
36. The practice of providing working capital loan
assistance to FCI on market linked rate has helped in
reducing their reliance on high cost funds. This in turn
has reduced the interest cost for providing food
security. This practice will be continued in the coming
years. FCI may look at the possibility of further
rationalizing their administrative cost and States are
bei ng requested to j oi n the De-central i sed
Procurement System in order to bring down the overall
cost of delivering food security to the nation.
37. On the assumptions that current price level may
prevail during 2011-12 in the world commodity markets
and factoring in impact of reform measures, provision
for fertiliser subsidy has been kept at `49,998 crore
in B.E.2011-12. Food subsidy is estimated at `60,573
crore in B.E.2011-12. In BE 2011-12, petroleum
subsidy including that to oil marketing companies to
compensate for under recoveries are also provided
at `23,640 crore.
38. In absolute terms provision for major subsides
is estimated to decline from `1,53,962 crore in RE
2010-11 to `1,34,211 crore in BE 2011-12. Total
Subsidies are estimated to decline from `1,64,153
crore in RE 2010-11 to `1,43,570 crore in BE 2011-
12. The present level of subsidy provision is premised
on the assumption that there would not be major
variations in the international market in fertiliser and
petroleum product prices during the entire span of
2011-12. At the same time, it is also assumed that
the al l otted quanti ty outgo under TPDS and
procurement costs would by and large remain stable
during the year. There is a need to focus on further
measures and means to ensure the effective utilisation
of these provisions and cap this expenditure to create
further fiscal space for increased investment in
physical and social infrastructure.
14
(d) Non-Plan Grants to States and UTs
39. In compliance with the recommendations of the
13
th
FC, non-plan grants have increased significantly
from `45,947 crore in 2009-10 to `66,311 crore in
B.E.2011-12. Under the following categories, grants
have been recommended by the 13th FC and the
same have been provided in BE 2011-12 and factored
in the estimates for 2012-13 and 2013-14:
Post-devolution Non-plan Revenue Deficit (NPRD),
Performance Incentive, Elementary Education,
Improving Outcomes, Environment related, Road
Maintenance, State-specific, Local Bodies, Disaster
Relief and GST Implementation (not included in BE
2011-12 but factored in for 2012-13 and 2013-14).
40. The total grants recommended during 13
th
FC
award period is `3,18,581 crore and is much higher
than the grants recommended by the 12th FC. This
coupled with recommended higher percentage of
devolution of Central Taxes to States, would result in
lower availability of revenue resources for the Central
Government for its expenditure. Accordingly, it would
impact the reduction in revenue deficit in the coming
years during the 13
th
FC award period.
41. In 2010-11, the Central Government continued
its commi tment to compensate the State/UT
Governments for loss of revenue that may arise on
account of phasing out of Central Sales Tax (CST). A
provision of `14,000 crore has been made in R.E.
2010-11 and `12,000 crore in B.E.2011-12 for this
purpose.
42. Based on the recommendations of the 13
th
FC
and likely other non-plan grants, total non-plan grants
to States and UTs are estimated at 0.7 per cent of
GDP in 2012-13 and 2013-14. These estimates also
show that non-plan grant to States and UTs as
percentage of tax revenue (net) to Centre has
increased from 9.3 per cent in RE 2010-11 to 10 per
cent in BE 2011-12.
(e) Pensions
43. Subsequent to the implementation of Sixth Pay
Commission, expenditure on Pension has gone up
significantly from `24,261 crore in 2007-08 to `56,149
crore in 2009-10. This increase was also due to the
payments of arrear components arising on account
of the pay commission recommendations. Pension
expenditure, which was 5.5 per cent of tax revenue
(net) to Centre and 0.5 per cent of GDP in 2007-08,
has increased to 12.3 per cent and 0.7 per cent
respectively in RE 2009-10. With the payments on
arrears bei ng compl eted i n 2009-10, these
percentages are estimated to come down to 8 per
cent and 0.9 per cent in 2009-10. However, with
payment of arrears being completed, these ratios are
estimated to come down to 8.2 per cent and 0.6 per
cent respectively in BE 2011-12.
44. Wi th assumpti on that pensi on rel ated
expenditure may grow at 5 per cent in the coming
years, it is estimated that pension payments would
reduce to 0.5 per cent of GDP by 2013-14 and would
decline to 6.5 per cent of net tax revenue to Centre in
the same year. The assumption made above is
associated with risk of large attrition rate in coming
years which would result in higher than estimated
expenditure in the coming years.
(B) Capital account
(i) Loans and advances
45. With States contracting domestic debt directly
from the market, the net loans and advances are likely
to decline in medium term. External loans to States
however will continue to pass-through the Central
Government.
46. Non-Plan loans are also extended to CPSUs for
various purposes, including budgetary support for
investments, restructuring/revival and Voluntary
Retirement Scheme/Voluntary Separation Scheme.
(ii) Capital outlay
47. The total capital expenditure is estimated at
`1,60,567 crore in BE 2011-12. Of this, Plan capital
expenditure is estimated to increase from `49,507
crore in 2009-10 to `68,096 crore in RE 2010-11 and
`77,943 crore in BE 2011-12 reflecting average growth
of 25.5 per cent in the two years period. Most of the
capital expenditure for the overall government system
are being accounted in the Central Government
accounts as grants for creation of capital assets under
the Revenue Account. This under depicts the capital
investment undertaken at the general government
level. Hence for better and more transparent
presentation of data, the entre expenditure under
grants for creation of capital assets are shown in a
separate Statement in Annex-6 of Expenditure Budget,
Volume-1. In the current scenario when capital market
has become deep and robust and when many of the
capacity addition in the form of capital expenditure is
taking place under the Public Private Partnership
mode, Central Public Sector Undertakings (CPSUs)
have been meeting a large part of their capital
expenditure through Internal and Extra Budgetary
Resources (IEBR). The IEBR of CPSUs (including
Railways) is estimated to increase by 26.2 per cent
from `2,03,638.08 crore i n R.E. 2010-11 to
`2,56,935.99 crore in B.E. 2011-12.
48. Non-plan capital expenditure primarily consists
of defence expenditure. Defence capital expenditure
is estimated to increase from `60,833 crore in
15
RE 2010-11 to `69,199 crore in B.E.2011-12.
However, the overall non-plan capital expenditure is
estimated to decline from `94,802 crore in RE 2010-
11 to `.82,623 crore. This reduction is primarily on
account of inclusion of some items of capital
expenditure like equity infusion in Public Sector Banks
etc. under Plan expenditure for accurte presentation
of data. The reduction in BE 2011-12 is also due to
provision of `5,000 crore in RE 2010-11 as short term
loans to FCI to augment their working capital
requirement. It is also due to completion of agricultural
debt waiver and debt relief scheme.
4. GDP Growth
49. There is further revision in the base year for the
calculation of National Income by the Central
Statistical Office (CSO) after the presentation of
Budget 2010-11. With this change, historical estimates
for GDP have undergone change with effect from
2004-05. The revised series of data shows that during
the year 2009-10 annual real GDP growth at factor
cost (at constant 2004-2005 prices) has increased to
8.0 per cent as compared to the growth rate of 6.8
per cent during 2008-09. The latest release of data
from CSO puts the growth rate for 2010-11 at 8.6 per
cent in real term and after factoring in inflation
expectation, the GDP growth (at current market prices)
for 2010-11 is estimated at 20.3 per cent. Thus the
GDP for the year 2010-11 (at current market prices)
is set at `78,77,947 crore. In the year 2011-12, with
the assumption that economy will continue to
accelerate to the trend growth rate, the real GDP
growth has been assumed at 9.0 per cent. After
factoring in estimated inflation of 5 per cent during
2011-12, the GDP growth (at current market prices)
for 2011-12 is estimated at 14.0 per cent resulting in
GDP of `89,80,860 crore (at current market prices).
For the period 2012-13 and 2013-14, after factoring
in medium term inflation expectation, the GDP growth
at current market prices is projected at 13.5 per cent
for 2012-13 as well as 2013-14.
C. Assessment of sustainability relating to
(i) The balance between Revenue
Receipts and Revenue Expenditure
50. The balance in the revenue account has to be
seen in the context of consolidated account of three
tier of government i.e. Centre, State and Local Bodies.
This is all the more relevant in Indian context as large
sum of inter government transfer takes place from
Centre to States and States to Local Bodies. This
distorts the true depiction of revenue account as one
looks at the fiscal account of different tiers of the
government in an isolated manner. The present
information system provides collated data at the
Centre and State level with a lag. However, it would
not be incorrect to analyse how much of imbalance in
revenue account of the Central government is arising
on account of transfers made in the form of grant for
the creation of capital assets to the other tiers of
government as well as other grantee bodies. This
exercise has been undertaken for BE 2011-12 and it
explains in a better manner about what is the effective
imbalance in revenue account that the government
needs to address in right earnest. After taking into
account expenditure in revenue account in the form
of grants for creation of capital assets, which is of the
order of 1.6 per cent of GDP in BE 2011-12, the
effective revenue deficit of the Central Government
comes down from 3.4 per cent (as per the technical
definition) to 1.8 per cent of GDP in BE 2011-12. It
will be the endevour of the government to eliminate
this deficit in a time bound manner. With the projected
level of expenditure for 2012-13 and 2013-14, along
with the assumption that the above mentioned grant
will increase in medium term at not less than 10 per
cent, the effective revenue deficit is estimated to come
down to 0.5 per cent of GDP in 2013-14. Policy
initiatives and administrative efficiency can make the
target of eliminating effective revenue deficit by 2013-
14 achievable.
(ii) The use of capital receipts including
market borrowings for generating
Productive Assets.
51. Non-plan expenditure at 126 per cent of total
revenue receipts during 2009-10 has resulted in use
of borrowed resources for consumptive expenditure.
This brings us back to the issue of structural problems
in the composition of expenditure which, if not
addressed, will further squeeze out the fiscal space
for undertaki ng devel opmental works. The
Government has addressed these issues in right
earnest while formulating the strategy for 2011-12.
Wi th focus on curtai ni ng growth i n non-pl an
expenditure, the above mentioned percentage is
estimated to decline to 103 per cent in BE 2011-12.
With further reallocation of resources towards priority
sectors, it is projected to decline to 90 per cent of
total revenue receipts in 2013-14.
52. In B.E.2011-12 the total Plan expenditure of
`4,41,547 crore is about 107 per cent of the estimated
fiscal deficit. This was only 72 per cent of the fiscal
deficit during 2009-10. This shows a significant
improvement in deployment of borrowed resources.
The Government will make further efforts for not using
debt receipts for financing non-plan expenditure
particularly non-plan revenue expenditure. The
endeavour will be to bring down the ratio of debt to
GDP and interest payment to net tax revenue of
Centre gradually to a sustainable level and use the
borrowed funds judiciously.
16
Annexure - I
COMPARISON OF MTFP WITH 13
th
FINANCE COMMISSION FISCAL ROADMAP
2010-11 2011-12 2012-13 2013-14
Fiscal Deficit
MTFP 5.1 4.6 4.1 3.5
13
th
FC 5.7 4.8 4.2 3.0
Revenue Deficit
#
MTFP 3.4 3.4 2.7 2.1
13
th
FC 3.2 2.3 1.2 0.0
Debt*
MTFP 45.3 44.2 43.1 41.5
13
th
FC 53.9 52.5 50.5 47.5
* Excluding NSSF Loans to States, Loans under MSS and accounting for external debt at current exchange rate.
# Difficulties in adhering to the targets for revenue deficit are explained in para 50 above and section C of Fiscal Policy Strategy Statement.

1
Speech of Mamata Banerjee
introducing the Railway Budget 2011-12
25
th
February 2011

1. Madam Speaker, I rise to present before this august House the Revised
Estimates for 2010-11 and the estimated receipts and expenditure for 2011-12.
I deem it an honour to present the third Railway Budget under the kind guidance
of the hon'ble Prime Minister. I profusely thank the Finance Minster for his
continued support and encouragement to the railways.

2. As the honble members are aware, the wheels of the railways continue to
move 24 hours, all 365 days. Railways services are comparable to emergency
services, required all the time. I am proud of the 14 lakh members of my
railway family, who toil day and night with unparalleled dedication. I am also
grateful to all passengers without whose cooperation and consideration, we
could not have run this vast system. I have also received unstinted support from
our two recognised federations and staff and officers associations.

3. Madam, rail transportation is vitally interlinked with the economic
development of the country. With the economy slated to grow at a rate of 8-9%,
it is imperative that the railways grow at an even faster pace. I see the railways
as an artery of this pulsating nation. Our lines touch the lives of humble people
in tiny villages, as they touch the lives of those in the bustling metropolises.

4. We are taking a two-pronged approach, scripted on the one hand, by a
sustainable, efficient and rapidly growing Indian Railways, and on the other, by
an acute sense of social responsibility towards the common people of this
nation. In this budget, we have attempted to combine a strong economic focus
with an equal emphasis on social inclusion with a human face.

5. Madam, while railways deliver on their promises, they are not good at
publicity. This House and the nation do not come to know of our achievements
or what we are doing.

Hum Aah Bhee Karte Hain Toh Ho Jaate Hain Badnaam
Woh Katl Bhee Karte Hain Toh Charcha Nahi Hota

6. We need a large heart and a large mind to undertake big works. With
every big work, our stature grows and our mind opens out to a larger vision.
During this year, we have met industry leaders, Chambers of Commerce and

2
Industry to encourage investment in the specified areas of infrastructure,
rolling-stock or service provision. Railways will provide economic share to our
partners for such endeavours. With this objective, railways have developed
several business-oriented policies for the first time. Some of these policy
initiatives are:-

i. Railways Infrastructure for Industry Initiative (R3i)
ii. Private Freight Terminal (PFT)
iii. Special Freight Train Operators (SFTO)
iv. Automobile Freight Train Operators (AFTO)
v. Automobile and Ancillary Hubs
vi. Kisan Vision (Cold Chains)
vii. New Catering Policy
viii. Rail Connectivity to Coal and Iron ore mines (R2CI)

7. The response to the policies has been encouraging and 85 proposals have
already been received. We have set up a Single Window System under
Secretary, Railway Board to take these forward.

8. As the honble members would agree, expansion of rail infrastructure
requires meticulous planning. Rising demand for coaches, locos and wagons
cannot be met immediately because their manufacture requires components
whose production has to be planned well in advance. Even some key material
and components for rolling stock are not readily available in the country and we
often have to depend on imports. As a result, supply of rolling stock has been
falling short of our requirements. Even now it is not available according to our
requirement. To meet the demand of passengers for more coaches, MEMUs,
DEMUs etc., we have decided to set up rail-based industries.

9. I appreciate that the demands of every honble member and citizens are
genuine. It is their right and I fully understand. I would like to help them as
much as I could but for constraints of coaches, locomotives and line capacity.
Thus it is difficult to meet every individual demand. We have tried to meet
some of the demands collectively within the limited resources. I would like to
assure the House if we are positive, if we go according to Vision 2020, we can
meet the demand within a short period. I believe in positive approach and
action. As Swami Vivekananda said :
Strength is life and weakness is death.

3
10. Madam, in the last two budgets, to meet the growing demand and to
create employment opportunities for the unemployed youth, I had announced
setting up of a large number of rail-based factories/manufacturing projects.
Work on all these projects are at different stages of progress and
implementation. The works at New Jalpaiguri, Adra, Jellingham and Kulti have
been taken up in collaboration with different PSUs. I thank SAIL, NTPC and
RINL for their cooperation and support. Other PSUs are also welcome to come
forward for such joint ventures.

11. Madam, I am happy to report that work on the new coach factory at Rae
Bareli is progressing rapidly now. The first coach is expected to be turned out
from the new plant within the next three months.

12. Railways have also been working on a number of projects involving long-
term supply contracts for locomotives, coaches and critical loco components at
Madhepura, Marhowra, Kanchrapara and Dankuni. Since these project models
are being attempted for the first time in the railways, it is necessary to carry out
due diligence. All these projects are progressing and a Core Group of officers is
working on these PPP/JV industries to take them forward.

13. Railways are already executing works either departmentally or through
PPP/JV at Budge Budge, Dankuni, Naopara, Anara, Tindharia, New Cooch
Behar, Kharagpur, Haldia, Guwahati and Kazipet. Work on the wagon factory
in Orissa will also be taken up once the site is finalized.

14. Work on ICF, Peramburs second unit will start soon. We have decided
that whatever problems are there will be sorted out and we will set up the
Palakkad coach factory. Railways are interested to partner with Autocast and
SILK at Cherthala, for which business plan is being revised to bring it in line
with the current needs of the railways.

15. Madam, I am happy to inform that Burn Standard Company Limited and
Braithwaite Company Limited have been brought under the administrative
control of Ministry of Railways this year.

16. Madam, to further expand rail-based industries, I would now like to
mention some new initiatives.

17. The prestigious Jammu-Kashmir Rail Link project involves a large
number of bridges. I propose to dedicate an industry for our brothers and sisters

4
of J&K, who are close to our heart. Therefore, railways will set up a Bridge
Factory in J&K, which is our heaven on earth. This industry will help in
developing ancillary industries leading to employment generation in the area. I
also propose to set up a state-of-the-art Institute for Tunnel and Bridge
Engineering at Jammu.

18. As per my announcement to set up a coach factory at Singur, land has not
been made available by the state government. However, several landowners
have volunteered to sell their land directly to the railways. In order to fulfill this
commitment, I propose to set up a metro coach factory on the land purchased
from willing sellers at Singur/adjacent Polba.

19. Northeast is our priority area and receives governments full support.
Imphal, the capital of Manipur will soon be connected to the railway network. I
have planned in advance. Therefore, I propose to set up a diesel locomotive
centre in Manipur.

20. Centre for Railway Information Systems (CRIS) is the professional IT
arm of Indian Railways. It is a nursery for development of software specialists
in the country. I propose to open a Centre of Excellence in software at
Darjeeling under the aegis of CRIS.

21. I propose to set up two more wagon units under JV/PPP mode, one each
at Kolar and Alappuzha, Kerala, and one more at Buniadpur.

22. A large number of small and medium size track machines have been
developed indigenously and are also being manufactured in India. I propose to
pursue a joint venture between railways and a partner to set up a
manufacturing industry for the indigenous production of large on-track
machines at Uluberia. I also propose to set up a new track machine POH
facility at the same place.

23. Madam, I am happy to announce setting up of a Rail Industrial Park
at Jellingham. This Park will be a cluster of diverse industrial units whose
output will be consumed by the railways. The Park will initially focus on high
volume safety and vital components. With this, we shall make a beginning
towards creating a global hub in India for the railway industry. A unit to
manufacture car steel bogies and couplers through a joint venture between Burn
Standard Co. Ltd. and SAIL has already been initiated in this Park. I also
propose to set up a Rail Industrial Park at New Bongaigaon.

5

24. The electrical energy requirement of railways is growing rapidly with the
expansion of the rail infrastructure and traffic. A captive thermal power plant of
1,000 MW at Nabinagar is at an advance stage of construction. A second
thermal power plant of 1,320 MW capacity at Adra is in the process of being set
up. Depending upon the fuel being made available at economic cost, I propose
to set up a 700 MW gas-based power plant at Thakurli in Maharashtra.

25. I propose to set up more mechanized laundries for improving the quality
of linen in trains at Nagpur, Chandigarh and Bhopal, in addition to Wadibunder,
Tikiyapara, Kamakhya, Secunderabad, Kacheguda, Indore, Lucknow, Banaras,
Samastipur, Sealdah, Tatanagar, Danapur, Bikaner, Bilaspur, Durg, Hatia,
Chennai, Mumbai and Ahmedabad, where they are commissioned or are being
set up. Proposals for laundries at Vishakhapatnam, Bhubaneshwar, Puri,
Gwalior, Manduadih, Gorakhpur, Lucknow, New Jalpaiguri, Jammu, Delhi,
Jaipur, Jodhpur, Tirupati, Ernakulam, Thiruvananthapuram, Hubli, Bengaluru,
Yashwantpur, Jabalpur, Allahabad, Mau, Amethi and Kota are also under
examination.

26. Madam, after having discussed the policy initiatives and rail-based
industries, I would now come to expansion of rail infrastructure.

27. For the first time ever, railways have framed Vision 2020, providing a
definite roadmap, both short-term and long-term, for the future. We intend to
go forward to achieve our goals with careful planning.

28. Madam Speaker, we had added only 10,677 km of new lines since
independence. I had announced an ambitious target of 1,000 km of new lines in
2010-11. This is in contrast to average addition of 180 km annually. In the
current year, we may do over 700 km, falling short of the target. But this would
be almost double of the highest ever performance in any single year. Unless we
set our targets high, we cannot realize the goals of Vision 2020. The honble
members will be happy to know that railways will be achieving its target of 800
km for gauge conversion, 700 km for doubling and 1,000 km of electrification.

29. Railways efforts to provide dignity to the poor through the Izzat scheme
in 2009-10 have benefitted over four lakh disadvantaged citizens. They are now
able to travel to their workplaces with their heads held high. Poverty drives
many people to live dangerously near railway tracks and often risk their lives.

6
Many perish every year. Their lives are very important to us. These dwellers
also affect smooth movement of trains. That is why we have decided to give
them small shelter through Sukhi Griha Scheme. This scheme is being taken
up on pilot basis to provide 10,000 dwelling units at Mumbai, Sealdah, Siliguri,
Tiruchirapalli and other places. This is our humble effort to help these dwellers.

Annual Plan 2011-12
30. Madam, the Annual Plan for the year 2011-12 has been proposed at
`57,630 cr which is the highest ever plan investment by the railways in a
single year. The Plan is proposed to be financed through GBS of `20,000 cr,
diesel cess of `1041 cr, internal resources of `14,219 cr, market borrowings of
`20,594 cr through Indian Railway Finance Corporation (IRFC), considering its
past excellent performance in the financial market. Normally IRFC raises
between `9,000-10,000 cr annually for leasing of rolling stock. Next year, an
additional amount of `10,000 cr will be raised through tax free bonds for
financing select capacity enhancement works. Railways will ensure servicing
this debt of tax-free bonds. Further, external source of financing through PPP,
WIS etc is expected to yield `1,776 cr.

31. Improving upon 2010-11, a greater thrust is being given to the expansion
of the rail network with a larger allocation of ` 9,583 cr for new lines. It is
planned to complete 1,000 km of new lines in 2011-12. In addition, the left
over new lines from last years target will also be completed. Apart from this,
`5,406 cr and `2,470 cr has been given for doubling and gauge conversion
projects to complete 867 km and 1,017 km respectively. To overcome shortages
in wagons, coaches and locomotives, `13,820 cr has been earmarked for
acquisition of rolling stock.

32. Indian Railways are a true symbol of inclusive growth and it is the
lifeline of the nation and contributes to national integration. It is an irony that
despite the presence of railways in India for 157 years, large parts of our
population have never seen a railway line. In the coming decade, Indian
Railways will continue to keep its service focus on the underprivileged and the
poor, even as it expands its services for the more fortunate. I quote Gurudev
Rabindranath Tagore:

Give me the strength never to disown the poor or
bend my knees before insolent might.

7
33. In the last budget I had announced updation of surveys for 114 socially
desirable new lines. Out of this 94 will be completed by March, 2011 and the
remaining by December, 2011. I propose to take up construction of these lines
in the 12
th
five year plan since this budget year is the terminal year of the 11
th

plan. Our dream is to bring about a social revolution through rail connectivity.
We need political freedom along with economic freedom that will usher in
prosperity for our millions of countrymen, more especially to the common man.

34. Madam, we have proposed to create a fund to implement the socially
desirable projects during the 12
th
Plan. Under the umbrella of this non-lapsable
fund, not only will the pending socially desirable lines be completed, but many
other similar new line projects would also be taken up. The scheme is being
named, Pradhan Mantri Rail Vikas Yojana. I am extremely thankful to the
honble Prime Minister for his support and guidance.

35. Madam, it is our continuous endeavour to connect unserved and
underserved regions to the rail network. We want underdeveloped areas to
develop and the people of these regions to join the process of growth. I
therefore, propose to take up construction of the following new lines in a few
such areas:-

i. Wadsa-Gadchirholi in Maharashtra
ii. Bhadutola-Jhargram via Lalgarh in West Bengal
iii. Gudur-Durgrajpuram in Andhra Pradesh
iv. Hansdiha-Godda in Jharkhand

36. Railways are already executing 19 projects in the similar difficult and
underdeveloped areas in the States of Orissa, Jharkhand, Chattisgarh, Bihar and
Maharashtra and I propose to increase the allocation to these projects to `771 cr.

37. A non-lapsable Fund for railway projects in the northeast region has
been created that will boost the progress of projects. All the state capitals of
this region except Sikkim will get connected by rail network in the next seven
years. The prestigious Udhampur-Srinagar-Baramulla project is also
progressing and work on Indias longest tunnel between Banihal and Qazigund
would be completed this year.

8
Safety & Security
38. Safety is our first priority. Every incident is unfortunate. We do not want
to see loss of even a single life. Unfortunately in two incidents of sabotage and
suspected sabotage, 216 innocent lives were lost. We are trying sincerely to
ensure such incidents do not occur. We extend our condolences to their
families.

39. Indian Railways connect 7,083 stations, and carry 2.20 crore people and
over 2.5 million tonnes of goods every day. As a result of our sustained efforts,
the index for train accidents has decreased significantly from 0.29 per million
train km in 2004-05 to 0.17 in 2009-10. This is despite the increase in traffic
from 16,021 trains per day and 538 crore passengers annually in 2004-05 to
18,820 trains and 720 crore passengers in 2009-10. Madam, it is very sad that
every year over 1.30 lakh people die in road accidents. Railway is passenger
friendly, safe and a cheap mode of transport. Rail fares are close to one-fourth
that of the road.

40. In my first tenure, I had approved the introduction of Anti Collision
Device (ACD). After ten years I find that it has been implemented only on NF
railway. Madam, our recent trials with an improved version of ACD have met
with success and it will be commissioned on three zonal railways, Southern,
South Central and South Western Railways. Considering the successful trials, I
have decided to extend this device to Eastern, East Coast, East Central and
South Eastern Railways. With this we will have covered 8 of the 17 zonal
railways.

41. The number of incidents at unmanned level crossings, on which we are
working very seriously, has come down by 36% with the elimination of 1,500
unmanned crossings, construction of 172 ROBs and 240 RUBs/subways. I have
lowered the eligibility criteria for manning from 6,000 TVUs to 3,000 TVUs.
Efforts will be intensified in the coming year by eliminating the remaining
eligible 2,500 unmanned level crossings as well as construction of 200 ROBs
and 325 RUBs/subways. Any other crossing required to be eliminated will also
be taken up for conversion.

42. A GPS based Fog Safe device has been deployed and I am happy to
report that this year railways have handled the foggy weather without any
untoward incident.

9
43. Madam, railways being a soft target, has been facing the wrath of
extremists, agitations and other unsocial elements. Incidences of disruptions by
way of bomb-blasts, sabotage, track-tampering etc. are on the rise. I appeal to
my countrymen to exercise discretion and restraint. Railways are their own
property and any damage will only result in inconvenience and loss of revenue
and will not help their cause.

44. As law and order is the responsibility of the state governments, railways
are mostly helpless in handling such situations. We cannot ensure efficient and
punctual operations of trains without the help of state governments. Some
states do help, some states are helpless. Frequent calls for rail rokos are not
only crippling operations on Indian Railways but also causing immense
hardship to passengers, not to talk of substantial loss of revenues. There have
been 115 cases of rail roko agitations during the period from April to
December 2010, a few of which have spread over a period of three weeks. In
the current year, till now more than 1,500 passenger carrying trains have been
cancelled, another 1,500 diverted over longer routes and more than 3,500
rescheduled on account of such disruptions. We want cooperation from all
concerned. Those who help us, we will also help them.

45. I am now making an offer that whichever state ensures trouble-free train
running for the whole year, shall be given two new trains and two projects as
a special package.

46. An All India Security Help Line on a single number has been set up to
facilitate passenger security and is likely to become operational this year. A
comprehensive bill has been drafted to empower RPF to deal with passenger
related offences and it is likely to be placed before Parliament soon. We are
reviewing the passenger security care programme to bring about all round
security improvement for passengers.

47. Madam, the thrust of the Budget this year is also on modernisation. A
number of measures will be taken to usher in latest technology. I would like to
spell out some of these steps for improving the efficiency of the system that will
ultimately benefit our customers:-

i. Based on the success of the pilot project of SIMRAN, jointly
developed by IIT, Kanpur and RDSO, a Real Time Train
Information System (RTIS) will provide reliable information on
train running.

10

ii. Collaboration with Bengal Engineering and Science University,
Shibpur for using jute geo-textiles in embankment design;

iii. A project with IIT, Chennai on prototype manufacture of ultrasonic
systems;

iv. Partnership with Jadavpur University for development of new
designs for rail steel bridges;

v. A collaborative study with IIT, Mumbai on the problem of
corrosion of rails;

vi. The Centre for Railway Research (CRR), collaboration between
IIT, Kharagpur and RDSO, has been sanctioned and is under
implementation.

vii. Centres of Excellence for development and prototyping various types
of Mechatronics systems at RCF/Kapurthala and DMW/Patiala;

viii. E-procurement and e-auction to ensure transparency and economy.

ix. Development of a comprehensive web-based databank for land and
asset management database for optimum utilization of our resources.

x. Issuing paperless railway receipts;

xi. Extend web based system of allotment of iron ore rakes to coal
traffic

xii. Run double-stack container trains from Gujarat ports to the major
ICD at Gurgaon.

Green Initiatives
48. Madam, railways are always environment friendly and are considered
evergreen. It is also the most fuel efficient mode of transport. Therefore, I have
declared 2011-12 as the Year of Green Energy. I would like to share some
of the green measures taken by the railways:-

11
i. Free supply of 14 lakh CFLs to railway households and phasing out of
incandescent lamps.
ii. Regenerative braking in Mumbai EMUs
iii. Windmill at ICF, Chennai
iv. Production of locos with hotel load converter
v. Increase use of solar energy at LC gates, stations etc.
vi. Use of bio-diesel, CNG and LNG in locos, workshops etc.

Passenger/Rail Users Amenities
49. Madam, for passengers a fresh thrust has been given to improve the
amenities and provide better experience at stations. In the last two years, we had
announced the upgradation of 584 stations as Adarsh Stations, out of which 442
stations will be completed by March 2011. The remaining will be completed in
2011-12.

50. Upgradation of stations would provide safe drinking water, pay & use
toilets, high-level platforms, better accessibility for the physically challenged
among many other facilities at these stations. I would like to assure all the
honble members that all the suggestion for Adarsh stations given by them have
been included in the following list of 236 stations. I will be happy to receive
suggestions from the honble members to add more stations.

Abhaipur, Acharya Narendra Dev Nagar, Achhnera, Alipurduar court,
Alipurduar Jn., Ambalgram, Ambernath, Ambikapur, Anara, Asoknagar Road,
Azimganj Jn., Baghdogra, Bagula, Bahadurpur, Baharu, Bahirgachhi,
Bahirpuya, Bahraich, Balagarh, Bala Mau, Balarambati, Balgona, Ballalpur,
Bamangachhi, Bamangram Halt, Bamanhat, Banarhat, Baneswar, Banka pasi,
Bankimnagar, Banstala, Barabhum, Baragaon, Barasat Jn., Barhni, Barmer,
Barsoi Jn., Basudevpur, Basuldanga, Batasi, Bathnakrittiba, Belakoba,
Beldanga, Beliaghata Rd, Beliatore, Betberia ghola, Bhadaiyan, Bhadrak,
Bhagalpur, Bhagwangola, Bharwari, Bhimgarh, Bidyadharpur, Bishnupur,
Boinchi, Brindabanpur, Buniyadpur, Burnpur, Chanchai, Chamagram, Champa,
Chandanpur, Chatra, Chatterhat, Chengannur, Chintamani, Chirimiri, Chitrakut
Dham Karvi, Chowrigacha, Churu, Dainhat, Darjeeling, Daryabad, Dasnagar,
Deoria Sadar, Deulti, Dhatrigram, Dhubulia, Dhulabari, Dildarnagar, Diva,
Dubrajpur, Dumurdaha, Durgachak, Eklakhi, Ettumanur, Falakata, Fatehpur,
Fatehpur Sikri, Gadadharpur, Gandhigram, Ghanpur, Ghoksadanga, Ghoragata,
Ghum, Gidhni, Gobra, Guntur, Gurap, Harishdadpur, Harishchandrapur,
Hasimara, Hindmotor, Hotar, Hridaypur, Hubli, Jabalpur, Jaganath Temple

12
Gate, Jakhalabandha, Jalor, Jamikunta, Janai road, Jangaon, Jessore road,
Jhantipahari, Jodhpur, Jorhat Town, Joychandipahar, Kahalgaon, Kaikala,
Kalchini, Kalinagar, Kaliyaganj, Kamakhyaguri, Kamareddi, Kanjiramittam,
Kanthi, Karimnagar, Kathgodam, Kathua, Khagraghat Rd., Khajuraho,
Khalilabad, Khemasuli, Khurja Jn., Kiraoli, Kishanganj, Kolar, Korba, Kotshila,
Kulpi, Kumbakonam, Kunda Harnam Ganj, Kurukshetra, Kuruppantara,
Labpur, Lohapur, Loknath, Lower Parel, Madarihat, Madhusudanpur, Majhdia,
Malatipur, Malda Court, Malkajgiri, Manendragarh, Manigram, Maninagar,
Mararikulam, Matigara, Mayiladuturai, Meerut City, Meghnagar, Mollarpur,
Mulanturutti, Murarai, Nabadwip Ghat, Nabagram, Nagore, Nagrakata,
Naimisharanya, Nandakumar, Narendrapur, Navsari, New Alipurduar, New
Bhuj, New Cooch Behar, Old Malda, Palla road, Palsit, Panagarh,
Pandaveswar, Panjipara, Patranga, Patuli, Phusro, Piravam Road, Pirtala,
Prantik, Quilandi, Raghunathpalli, Raigarh, Raipur, Rajbandh, Rajgoda,
Rajnandgaon, Ramrajatala, Rangiya, Ratangarh, Remount road, Rudauli,
Rupnarayanpur, Sabarmati, Sadulpur, Sagardighi, Sakoti Tanda, Salanpur,
Salboni, Salem, Sambre, Sankrail, Santaldih, Sardiha, Sasthankotta, Satna,
Shahganj, Shalimar, Sidlaghatta, Simlagarh, Sirathu, Sitapur Cantt., Sivok,
Sohawal, Sonada, Srinivaspura, Sukna, Sultanpur, Talit, Thanabihpur, Tildanga,
Tiruppur, Tuticorin, Udhna, Vaikam Road, Vasco-da-gama, Vellarakkad.

51. Though railways have announced the setting up of number of world class
stations, not much headway could be achieved because of their high costs. We
are taking a relook at the parameters and guidelines to provide what will suit
Indian passengers best. This work will definitely be taken up in the coming
year.

52. Out of the 160 MFCs announced, a few are completed and few are in the
process of completion. I have given a special target to complete all the MFCs
next year. I propose to set up more MFCs with budget hotels at Bangarpet,
Secunderabad, Amethi, Ramnagar, Ajmer, Chandigarh, Amritsar,
Thiruvananthapuram, Kamakhya, Gaya, Rae Bareli, Deoghar, Varanasi,
Bhubaneswar, Vellore, Kanyakumari, Srinagar, Sasaram, Bhagalpur, Panipat,
Bhuj, Anand, Arsikere, Birur, Neemach, Ratlam, Azamgarh, Ujjain, Adra,
Midnapore, Tamluk, Purulia, Thakurnagar, Sagardighi, Jangipur, Bahrampur,
Nabadwip, Kulti, Bolapur, Diamond Harbour, Naihati, Kanchrapara, Hajipur,
Islampur and Rohtak.

13
53. Some of the measures taken/proposed to be taken to improve passenger
amenities are:-

i. Introduction of a pan-India, multi-purpose Go-India smart card on a
pilot basis. This will be one single window package for the passenger to
seamlessly pay for tickets for long distance, suburban, metro etc.
journeys. The card can be used in booking counters, vending machines,
internet etc.;

ii. Two new coaching terminals at Nemam and Kottayam in Kerala, one in
Mau Nath Bhanjan in Uttar Pradesh and another in Dankuni, West
Bengal;

iii. Better accessibility at stations for physically challenged customers;

iv. Extension of Rail Yatri Sevaks with modern trolleys to six more
stations: New Delhi, Mumbai, Chennai, Ahmedabad, Bengaluru and
Thiruvananthapuram;

v. A new portal for e-ticketing by Centre for Railway Information
Systems (CRIS) is ready and will be launched shortly. Booking of tickets
through this portal would be cheaper with a charge of only ` 10 for AC
classes and ` 5 for others;

vi. Provision of internet access on Howrah-Rajdhani Express as a pilot
project;

vii. Extension of Train Management System to New Delhi, Bangalore,
Secunderabad, Ahmedabad and Lucknow stations to provide information
on running of trains,

viii. Introduction of advance booking of retiring rooms.

54. Madam, I propose to introduce a new Super AC class of travel. The
new class will provide improved comfort and features and more exclusivity.

Golden Rail Corridor
55. Madam, I am happy to announce that pre-feasibility study for the western
leg (Delhi-Mumbai) of the Golden Rail Corridor would start early next year.

14
The study is being undertaken with help from Japan, with the objective of
raising speed of passenger trains to 160-200 kmph. Similar studies will be
initiated for other corridors including Mumbai-Kolkata, Chennai-Bangalore,
Delhi-Jaipur and Ahmedabad-Mumbai.

Staff
56. Madam, our employees are our biggest asset and it is they who keep the
wheel of progress moving. Some of the measures I propose to take for their
welfare are:-

i. Expand the scope of Liberalized Active Retirement Scheme for
Guaranteed Employment for safety category staff by enhancing the
existing criteria of grade pay from `1,800/- to `1,900/-.

ii. Considering the Indian family structure and values, extending medical
facilities to both dependent father and mother of railway
employees.

iii. Increasing the scholarship for the girl child of gangmen and group
D employees to `1,200 per month for higher education.

iv. Setting up of a Railway Vidyalaya Prabandhan Board (RVPB) to
improve quality of education to children studying in 269 railway
schools. The Board will draw up a plan for improving the physical and
educational infrastructure of these schools to be implemented in a time
frame of three years.

v. In order to provide easy access to medical facilities in remote and
inaccessible areas for our employees, it is proposed to provide 20
Medical Road Medical Vans at different locations to begin with.

vi. I am happy to report that all the proposed 20 hostels for children of
railway employees have been commissioned and another 20 would
be set up next year.

57. Madam, my Ministry is undertaking restructuring of all the cadres in
the railways to afford adequate promotional opportunities to the officers and
staff.

15
Recruitment
58. Madam, after the new recruitment policy announced last year,
recruitment process has already been set in motion for filling the vacancies of
about 1.75 lakh in Group C and Group D posts. Steps have also been taken
to fill up about 13,000 posts in Railway Protection Force. These mega
recruitment drives will cover the backlog of SC/ST/physically handicapped
quota.

59. I am happy to inform that for the first time, railways are inducting 16,000
ex-servicemen by end of March 2011. As also announced last year, we are also
recruiting more than 1,200 ex-servicemen in RPF. It is our humble tribute to our
brave jawans who defend our borders.
koi sikh koi jaat maratha
koi gurkha koi madrasi
sarhad par marnevaala
har veer tha bhaaratvasi
jo shaheed hue hain unki
jara yad karo kurbani.

Training
60. To enhance skills of our frontline staff in dealing with the customers, a
training centre is proposed to be started at Kharagpur. Also multi-
disciplinary training centres would be set up at Dharwad, Kolkata and Pune
including an exclusive international centre at Agra. A new basic Training
Centre at Kurseong is proposed to cater to the needs of Northeast Frontier
Railway including Darjeeling - Himalayan Railway.

Setting up of Polytechnics
61. I am happy to announce that five Polytechnics will be set up at Varanasi,
Machlandpur, Vadodara, Bhilai and Hubli-Dharwad under MOU with Ministry
of Human Resource Development. This will also contribute towards the
national mission of skill development.

Sports
62. As the honble members are aware, railways have always provided
congenial and enabling environment for breeding of sports talent in the country.
I take great pride in reporting that railway sportspersons brought 25 medals
(including 13 Gold of the 38 won by India) in the recently held Commonwealth
Games, 2010. The excellent performance of railway sportspersons continued in
the Asian Games also with a contribution of 7 out of 14 Golds for India.

16
Railways also ran a special Commonwealth Express which was visited by 8
lakh people.

63. Madam, railways will continue to strengthen the sports infrastructure and
open more sports academies, stadia and multi-purpose halls. It is also proposed
to create a separate sports cadre so that their aspirations are fully met.

Promotion of Cultural Activities
64. Madam, you will agree that the Railway family cannot isolate itself from
the cultural field. Therefore, I have formed a Cultural Promotion Board to
boost the cultural activities across the length and breadth of the country which
will be railways efforts to preserve and promote the diverse and rich cultural
heritage of the nation.

65. To commemorate the 150
th
Birth Anniversary of Gurudev Rabindranath
Tagore, on 9
th
May, 2010, a special exhibition train, Sanskriti Express, was
launched. It is showcasing artistic works, philosophy and teachings of Gurudev.
The train has been moving across the country and has been visited by more than
24 lakh people in 18 states so far.

66. At the invitation of our beloved Sheikh Hasina, Honble Prime Minister
of Bangladesh, this train is set to go on a cultural exchange programme to
Bangladesh according to their convenience. I am thankful to her for suggesting
Sonar Tori as the name of the train. I wholeheartedly accept her suggestion.

67. Several other special exhibition trains such as Mother Express a
tribute to Mother Teresa on her birth centenary and Aurobindo Express have
also been run to disseminate the message of these great personalities. In
addition, running of Vivekananda Express will be extended for two years up
to his 150
th
birth anniversary in 2013. We have also run a Technology
Express to spread the awareness of science and technology among youth and
students.

Financial Performance
68. Madam Speaker, I have no hesitation in informing this august House that
Indian Railways are passing through a very difficult phase. The year 2009-10
was challenging for the railways. Implementation of the 6
th
Pay Commissions
recommendations increased the expenditure on staff and pension by an
unprecedented 97%. The latest assessment of Pay Commissions impact reveals
an additional expenditure of `73,000 crore during the XI Plan period. This has

17
heavily impacted our internal generation for plan investment. However, by
prudent financial management, we have not only paid the full dividend for
2009-10, but also achieved an operating ratio of 95.3%. In fact, if we do not
take pay commission arrears into consideration, which rightfully are liabilities
of previous financial years, the operating ratio would have been 84% even with
payment of higher salaries and pension. If the salaries and pension are also kept
at the earlier levels, the operating ratio comes down even further to 74.1%.

69. The testing times for the railways continue in 2010-11 due to the impact
of allowances and several post-budgetary factors. On the earnings side,
disruption of train movements has resulted in a loss of about `1,500 cr and
another `2,000 cr due to the ban on export of iron ore. As a result, the loading
target had to be reduced by 20 million tonnes to 924 million tonnes. However,
in the revised estimates, goods earnings have been retained at the budget level
based on trends of higher yield per NTKM. The total gross earnings have now
been fixed at `94,742 cr which is `177 cr higher than the budget. With the
reduced traffic suspense clearance of `98 cr, Gross Traffic Receipts is higher
than the budget target by `75 cr at `94,840 cr.

70. On the expenditure side, two hikes in the rates of HSD oil and increased
electricity tariff in some states, higher DA rates and excise duty rates, as well as
impact of unanticipated higher salary and allowances, raised the requirement by
`5,700 cr. I am proud to say that we will save `3,700 cr by our economy drive
and other austerity measures. Next year we will save more. Ordinary Working
Expenses has now been fixed at `67,000 cr, an increase of `2,000 cr over
Budget Estimate. After providing for `5,700 cr and `14,500 cr towards
Depreciation Reserve Fund and Pension Fund respectively in the Revised
Estimates, the Total Working Expenses are likely to be `87,200 cr. Accounting
for full dividend liability of `4,917 cr, the Excess comes to `4,105 cr. The
revised operating ratio works out to 92.1% which would have been 72.8% with
pre-pay commission salaries. The revised plan outlay has been kept at `40,315
cr.

71. Madam, I would like to thank all the Parliamentary Committees including
the Railway Convention Committee for their full support.

18
Budget Estimates, 2011-12
72. Madam, I shall now deal with the Budget Estimates for 2011-12.

73. On the basis of freight traffic projection of 993 million tonnes and
passenger growth of 6.4% over 2010-11, the Gross Traffic Receipts are
estimated at `1,06,239 cr assuming a clearance of `200 crore from traffic
suspense. Madam, for the first time, railways earnings are set to exceed the
rupees one lakh crore mark. Ordinary Working Expenses have been assessed
at `73,650 cr. This represents an increase of 9.9% over Revised Estimates of
2010-11 to cater for annual increments of salaries, DA, higher requirement for
fuel and materials for increased level of activity and lease payments. The
appropriation to Pension Fund is placed at `15,800 cr and to Depreciation
Reserve Fund at `7,000 cr compared to `5,700 cr in the Revised Estimates,
2010-11. Total Working Expenses therefore are placed at `96,450 cr. A
provision of `6,735 cr has been made for dividend payment leaving an Excess
of `5,258 cr to be utilized for Development Fund and Capital Fund. The
expected Operating Ratio is 91.1%.

74. With this, I hope the railways will soon emerge stronger, leaving behind
the impact of the Pay Commission and engage fully in the revival of its
financial health.
Hamara Mushkil Daur Gujar Chuka Hai
Aur Hum Din-o-din Majboot Hote Jayenge

(Tough times are now over and Railways,
will grow from strength to strength from here)

Metropolitan Projects
75. Madam, Indian Railways have only one metro i.e. Kolkata Zonal Metro
Railway. We are proud of it. As a full-fledged zone, Kolkata Metro is
expanding its network. A core committee has been set up to closely monitor the
progress of ongoing works for the speedier completion of the following
sections:-

i. Naopara to Barasat via Bimanbandar
ii. Baranagar to Barrackpore and Baranagar to Dakshineswar
iii. Dum-Dum Airport to New Garia via Rajerhat
iv. Joka to BBD Bagh via Majerhat

19

76. The entire section from Mahanayak Uttam Kumar (Tollygunge) to Kavi
Subhash (New Garia) has been commissioned. Every day over 5 lakh
passengers utilize the metro services.

77. It is also proposed to take up the following new surveys for new
connectivity of Kolkata metro:-

i. Joka-Diamond Harbour
ii. Baruipur - Kavi Subhash
iii. Howrah Maidan to Srirampur via Dankuni and Singur
iv. Howrah Maidan Belur
v. Howrah Maidan Santragachi Dhulagarh
vi. Joka-Mahanayak Uttam Kumar
vii. Barrackpore to Kalyani

78. It is also proposed to introduce 34 new services in Kolkata Metro in the
coming year.

79. Railways are committed to continue the partnership with Maharashtra for
strengthening Mumbais suburban system.

80. I am happy to inform the august House that for the first time, 20-car
MEMU trains have been introduced on Northern Railway during 2010-11 to
reduce overcrowding.

Integrated Suburban Railway Networks
81. Madam, India is witnessing rapid urbanization putting great pressure on
our cities and towns. Transport infrastructure will be a key to their growth and
sustenance. I propose the development of integrated suburban railway networks
in large cities like Mumbai, bringing together suburban railway, metro railway
and other rail infrastructure under a single integrated system which will provide
faster, efficient, affordable and comfortable transportation to the citizens. To
begin with, I plan to introduce this concept in those cities where suburban
system exists, such as Hyderabad, Ahmedabad, Kolkata, and Chennai. We
propose to strengthen the suburban system of Hyderabad-Secundeabad by
implementing six projects under MMTS Phase II.

20
82. Madam, Mumbai Rail Vikas Corporation (MRVC) has helped bring
enormous improvements in Mumbais suburban system. I now wish to bring
about a similar transformation to the suburban transport system of the other
megalopolis of the country, Kolkata. For a 100 km and more around Kolkata,
the lives of the people are inexorably linked with activities, trade and industry
of the city. There is a great need to upgrade the entire suburban system of
Kolkata with better, faster and more number of services including 15-car trains.

83. I am aware that such improvements need substantial finances. Railways
have limited resources. Therefore, I propose to set up Kolkata Rail Vikas
Corporation (KRVC) on the lines of MRVC, which will raise funds through
banks and other financial institutions, Municipal Corporation and other
stakeholders. I believe, this single measure will kick start Kolkatas return to its
days of glory. Similar corporations can be considered for congested suburban
systems in other states.

Production Units
84. I must complement all the Production Units who have performed well in
2009-10. I am happy to report that CLW has turned out the first locomotive
with hotel load converter to meet power requirement of coaches and pantry
car. The capacity of Diesel Locomotive Works (DLW) is being augmented to
300 locos. It has also indigenized GM locomotives to bring the cost down.

Public Sector Undertakings (PSUs)
85. All the eleven Railway PSUs have performed well in 2009-10 with a
turnover of more than `15,000 cr, earning a net profit of `1,782 cr. These PSUs
paid a dividend `311.88 cr to the railways.

Concessions
86. At present physically handicapped persons are not entitled for
concessions on Rajdhani and Shatabdi trains. It is proposed to extend the
concession facility to them in these trains also.

87. Press correspondents are now entitled to avail 50% concession with
family once in a year. It is proposed to increase this facility to twice a year.

88. It is proposed to extend the facility to the Kirti and Shaurya Chakra
awardees of travelling in Rajdhani and Shatabdi trains.

21
89. In case of unmarried posthumous Param Vir Chakra and Ashok
Chakra gallantry award winners of armed forces, it is proposed to extend the
facility of card passes to the parents.

90. At present the concession for senior citizens is extended to both men and
women at 60 years of age. I propose to reduce this in case of women to 58
years. I also do not want to annoy the men, and therefore, propose to increase
their concession from 30% to 40%.

Wagon Procurement
91. Madam, adequate supply of wagons is a pre-condition to fulfilling ever
increasing demand for rail transport. The august House would be happy to
know that a record procurement of 16,500 wagons is being done in the current
year. We have also kept a higher target of 18,000 wagons for the next year.

Dedicated Freight Corridors (DFC)
92. Madam, the main loan agreement for phase I of Western Corridor of DFC
with Japan International Cooperation Agency (JICA) has been signed and
bidding process for civil and track work has commenced. For the Eastern
Corridor, the appraisal by World Bank for Khurja-Bhaupur section would be
carried out next month. I am extremely happy to announce that work from
Dankuni end on the eastern corridor has already started. We want to complete
the DFC project by December, 2016 as scheduled.

93. As honble members are aware, land is a sensitive issue. With the
objective of reducing the number of land losers, we have made efforts to bring
the alignment of the DFC parallel to the existing railway network and thereby
using 12,000 acres from railways land bank. It has also reduced the
requirement of land acquisition by 2,718 acres resulting in a saving of about
`300 cr.

New Lines
94. Madam, as I mentioned earlier, all the 114 socially desirable projects
which have been surveyed recently, will be included in the 12
th
Plan and
financed through the proposed Pradhan Mantri Rail Vikas Yojana.

95. In my last budget speech, 33 new line sections covering 1,021 km were
identified for completion as compared to less than 200 km normally. I am
happy to inform the House that we have taken a giant leap in completion of new
lines projects. The progress of laying new lines will be further accelerated and

22
in the year 2011-12, we are confident of exceeding a milestone of laying of
1,000 km of new lines. The sections which have either been completed or will
be completed during 2010-11 are:-

1. Chandurbazar-Narkhed
2. Deogarh- Dumka
3. Mandarhil Hansdiha
4. Bhawanipatna-Junagarh
5. Barkakhana-Kuju
6. Nawadih Dhanwar
7. Tarn Taran-Goindwal
8. Lalitpur-Udaipura
9. Mahrajganj - Bishunpur Mahuari
10. Ajmer-Pushkar
11. Jagityal- Mortad
12. Khanapur- Homnabad
13. Salem Namakkal
14. Ramaganjmandi - Jhalawar
15. Lonand-Phaltan
16. Rampurhat- Pirargarhia
17. Deoghar Chandan
18. Khurda Road Begunia
19. Phulwarisharif-Patliputra
20. Jhajjar-Rohtak
21. Abohar-Fazilka
22. Agra-Fatahabad-Bah
23. New Coochbehar-Golakganj
24. Nossam- Banaganapalli
25. Vishnupuram- Jahanpad
26. Gadwal-Pandurangswami Nagore Karaikkal
27. Matnasibpur - Masagram

96. The target of 800 km for Gauge Conversion was fixed for 2010-11 and I
am happy to inform the house that this target will be met. The sections which
have either been completed or will be completed during 2010-11 are:-

1. Krishnanagar - Shantipur
2. Sitamarhi-Bairgania

23
3. Kaptanganj - Thawe
4. Katihar-Tejnarayanpur
5. Mavli-Nathdwara
6. Mayiladuturai - Tiruvarur
7. Anandapuram-Talguppa
8. Bodeli-Chottaudepur
9. Bardhman Balgona
10. Aunrihar Jaunpur
11. Aluabari-Siliguri
12. Ratangarh-Bikaner
13. Dindigul - Palani
14. Tirunelveli - Tenkasi
15. Bharuch-Samni-Dahej

97. The target for Doubling was fixed as 700 km for the year 2010-11 and I
am happy to inform the august House that this target will be met. Sections
which have either been completed or will be completed during 2010-11 are as
under:-

1. Pen-Kasu
2. Dhanauri Kiul
3. Kalinarayanpur Biranagar
4. Nalikul Tarkeswar
5. Pandabeswar Chinpai
6. Umeshnagar-Khagaria of Begusarai-Khagaria
7. Targena-Jehanabad
8. 4th line between Kottavalasa-Simhachalam
9. Chakki Block Hut-Chakki Bank
10. Tundla Yamuna Bridge
11. Khalilabad Munderwa
12. Mau Indara
13. Malda-Old Malda
14. Netravati - Kankanadi
15. Ennolre - Attipattu
16. Barbil-Barajamda doubling
17. Champa Bypass Line
18. Mysore-Naganahalli
19. Devanur-Ballakere

24
20. Part of Udhna-Jalgaon
21. Gandhidham-Kandla Port
22. Palwal - Bhuteshwar third line
23. Rajathgarh-Barang
24. Nancherla-Aspari
25. Kamalapuram-Muddanuru
26. Part of Panskura- Kharagpur
27. Panvel-Apta
28. Barasat Sondalia
29. Baruipur Magrahat
30. Khamargachi Jirat
31. Karhagola-Kursela of Semapur-Kursela
32. Begusarai-Lakho of Begusarai-Khagaria
33. Sasan-Rengali
34. Budhi-Kathua
35. Panki-Bhaupur- 3rd line
36. Bankata - Bhatni
37. Govindnagar - Basti
38. New Guwahati-Digaru
39. Harsauli-Rewari
40. Mavelikkara - Chengannur
41. Kayankulam - Haripad
42. Adra-Joychandipahar doubling
43. Ramangaram-Settihalli
44. Mugad-Kambarganvi
45. Kalapipal-Phanda
46. Gandhidham-Adipur
47. Part of Bilaspur-Urkura
48. Khurda-Barang
49. Guntakal Raichur
50. Gooty Pullampet
51. Kondapuram-Tadipatri
52. Salkaroad-Anuppur doubling

98. The new lines sections covering 1,075 km proposed to be completed in
2011-12 are:-

1. Admednagar-Narayandoh

25
2. Gokulnagar-Mayonapur
3. Dumka-Shikaripara
4. Biraul-Kusheshwarsthan
5. Koderma-Barhi-Hazaribagh-Mandu-Kuju
6. Runisaidpur-Jubbasani
7. Part of Talcher-Bimalgarh
8. Pandu Pindara-Bhaibwa
9. Bhind-Etawah
10. Bishnupur-Mahuari-Mashrakh
11. Bhatni-Chauria
12. New Mal Jn. to Changrabandha
13. Harmuti-Naharlagun
14. Namakkal-Karur
15. Angamalli-Kaladi
16. Raichur-Pandurangaswamy
17. Nossam-Banaganapalle
18. Devarakadra-Krishna
19. Kanivehalli-Chikmagalur
20. Hirisave-Shravanabelagola
21. Talpur-Arambagh
22. Banka-Karjhusa Halt
23. Ajimganj-Jiaganj
24. Part of Daniawan-Biharsharif
25. Part of Dhanawar-Giridih
26. Kosi Bridge
27. Morinda-Khamnano
28. Part of Udaipura-Mawai Fatehabad-Bah
29. Etawah-Mainpuri
30. Bathua Bazar-Panchdeori
31. Paniyahwa-Chhitauni
32. Part of New Coochbehar-Golakganj
33. Dausa-Deedwana
34. Walajah Road-Ranipet
35. Metpally-Armoor
36. Homnabad-Hallikhed
37. Banaganapalli-Nandyal
38. Deshpran-Nandigram
39. Sakrayapanta-Kanivehalli

26
40. Part of Lalitpur-Khajrao-Satna, Khajuraho-Mahoba & Rewa-
Singraullli

99. Madam, a target of 1,017 km has been fixed for Gauge Conversion in
2011-12 including the following sections:

1. Krishnanagar-Nawadwipghat
2. Murliganj-Banmankh
3. Chauradano-Raxaul
4. Anandnagar-Naugarh
5. Rangiya-Rangapara North
6. Ratangarh-Sardarsahar
7. SriganganganagarHanumangarh
8. Palghat-Pollachi
9. Nidamangalam-Mannargudi
10. Ankeleshwar-Rajpipla
11. Madhepura-Murliganj
12. Bairgania-Chauradano
13. Bareilly-Lalkuan
14. Naugarh-Barhni
15. New Malda Junction-New Maynagori Road
16. Sikar-Churu
17. Palani-Pollach
18. Mahamadurai-Virudhnagar
19. Kolar-Chintamani
20. Ratlam-Fatehabad

100. The following sections covering 867 km are proposed to be doubled in
2011-12 are as under:-

1. Apta-Pen
2. Jirat-Guptipara
3. Chandpara-Bongaon
4. Dakshin Barasat-Lakshmikantapur
5. Chandrapur-Bhandaridih
6. Korukonda-Vizianagaram
7. Palwal-Ballabgarh
8. Jakhal-Mansa

27
9. Chauri Chaura-Baitalpur
10. Burhwal-Jhangirabad
11. Banas-Swarupganj
12. Manchiriyal-Mandamari
13. Gokulpur-Midnapur Doubling
14. Muri-Muri Outer with Bridge
15. Tikiapara-Santragachi
16. CPH-Bye pass
17. Ballakere-Birur
18. Vyara-Chinehpada
19. Kasu-Roha
20. Guptipara-Ambika Kalna
21. Ghutarisharif-Canning
22. Magrahat-Diamond Harbour
23. Jharsuguda-Rengali
24. Kottavalsa-Kantakapali
25. Tughlakabad-Faridabad
26. Domingarh-Sahjanwa
27. Baitalpur-Bhatni
28. Keshavganj-Sirohi
29. Part of Chengalpattu-Villupuram
30. Raghavapuram-Peddampet
31. Dumetra-Champajharan
32. Banspani-Jaroli
33. Kalumna-Nagpur
34. Maddur-Hanakere
35. Birur-Ajjampur

101. In the last two budgets, I had announced 251 updating surveys/new
surveys for new lines/gauge conversion/doubling. Of these, the following 190
surveys have been completed or will be completed by the end of this financial
year. These lines will also be taken up in the 12
th
Plan:-

1. Bhadrachallam-Kovvur
2. Hyderabad-Gazwal-Siddipet-Sircilla-Jagityal
3. Nizamabad-Ramagundam
4. Barwadih-Chirimiri
5. Raipur-Jharsuguda

28
6. Pendra Rd-Korba/Gevra Rd
7. Bhavnagar-Mahuva
8. Patiala-Kurushetra
9. Panipat-Meerut
10. Bahadurgarh-Jhajjar
11. Hisar-Sirsa via Agroha, Fatehabad
12. Bilaspur to Leh via Kullu & Manali
13. Una-Jaijon Doaba
14. Jogindernagar to Mandi
15. Parwanoo-Darlaghat
16. Baramulla-Kupwara
17. Jammu-Poonch via Akhnoor, Rajouri,
18. Kathua-Basoli-Bhadarwah-Kishtwar
19. Barajamda-Tatina
20. Bhojudih-Mohuda
21. Hansdiha-Godda
22. Kandra-Namkom
23. Raigarh-Mand Colliery to Bhupdeopur
24. Ranchi-Kandra
25. Gadag-Harihar
26. Tumkur-Davangere
27. Madurai-Kottayam
28. Erumeli-Punalur-Trivendrum
29. Barpeta Road-Tihu.
30. Jogighopa to Silchar via Panchratna
31. Murkongselek-Pasighat
32. Naginimora-Amguri
33. Rangpo-Gangtok
34. Salna-Khumtai
35. Sarthebari Changsari
36. Tuli-Tuli Road
37. Gunupur-Theruvali
38. Puri-Konark
39. Yamunanagar-Patiala
40. Una-Hoshiarpur
41. Jagadhri-Paonta Sahib-Rajban
42. Beas-Kapurthala
43. Qadian-Beas

29
44. Devli-Tonk-Sakatpura
45. Dindigul-Kumli
46. Rameswaram-Dhanushkoti
47. Amethi-Shahganj via Sultanpur
48. Diamond Harbour-Budge Budge- Akra
49. Pandabeshwar- Ikra
50. Ikra-Churulia- Gourandi
51. Bongaon- Kalyani
52. Ranaghat- Duttapulia
53. 3rd line between Krishnanagar- Naihati
54. Lucknow-Lakhimpur-Pilibhit via Sitapur
55. Kapilvasthu- Basti via Bhansi
56. Tanakpur- Bageshwar
57. Kanti- belda
58. Digha- balichak
59. Marikuppam- Kuppam
60. Nangli- Chittoor
61. Ahmedabad-Botad & Dhasa-Jetalsar
62. Rajkharswan-Ranchi
63. Hasnabad-Samshernagar
64. Arambagh-Khana
65. Canning-Gosaba via Basanti
66. Kakdweep-Sagar-Kapilmuni
67. Dullabcherra-Cheraji
68. Mandir Bazar-Ramganga
69. Chalsha-Jhaldhaka
70. Ghatakpukur-Minakhan
71. Bilara-Bar
72. Baruipara-Furfura Sharif-Arambagh
73. Ratlam-Banswara-Dungarpur
74. Krishnanagar-Nabadwipghat extension to BB loop
75. Machhlandpur-Swarupnagar
76. Sainthia-Chowrigacha via Kandi
77. Yamuna Nagar-Chandigarh via Sadhaura, Naraingarh
78. Singur-Nandigram
79. Dabwali-Kalanwali via Sirsa
80. Mirik-Gangtok

30
81. Joynagar-Raidigi
82. Madurai-Ernakulam (Cochin)
83. Dantewara-Malkangiri
84. Alamatti-Kopal
85. Medak-Akkanapet
86. Madhuban-Giridih
87. Ajmer-Sawaimadhopur via Tonk
88. Sambalpur-Behrampur
89. Rajkot- Viramgam
90. Chhindwara-Nainpur-Mandla Fort
91. Ahmedpur-Katwa
92. Nagbhir-Nagpur
93. Tala-Princepghat-Majerhat
94. Secunderabad-Mahboobnagar
95. Sahibganj-Bhagalpur
96. Sambhal-Gajraula
97. Daurala-Bijnor via Hastinapur
98. Chandigarh-Dehradun via Jagadhari
99. Rishikesh-Doiwala
100. Roorkee-Haridwar
101. Hasnabad-Pratapadityanagar
102. Chaparmukh-Dibrugarh
103. Dangri-Dhola
104. Dehradum-Kalsi
105. Port Blair-Diglipur
106. Pandurangpuram-Bhadrachalam
107. Pattancheru - Adilabad
108. Jagdalpur-Dantewara
109. Bhavnagar-Tarapore
110. Kharhagola-Santhalpur
111. Kaithal-Karnal
112. Bilaspur-Rampur Bushahr
113. Udhampur/Katra - Bhairawah, Doda to Kishtwar
114. Gua-Manoharpur
115. Jhajha-Giridih via Sonuchakai
116. Lohardaga-Korba
117. Nawadah-Giridih via Satgawan
118. Tori-Chatra

31
119. Almatti - Yadgir
120. Dhule-Amalner
121. Jalna-Khamgaon
122. Wardha-Katol
123. Warora-Umrer
124. Ramtek-Gotegaon via Sioni
125. Baran-Shivpuri
126. Lalabazar-Vairengte
127. Lekhapani-Kharsang
128. Rupai-Parashuramkund via Mahadevpur, Namsai, Chingkham
129. Jeypore-Malkangiri
130. Navrangpur-Jeypore
131. Patiala-Jakhal/Narwana via Samana
132. Ajmer-Kota
133. Jaisalmer-Barmer
134. Nokha-Sikar
135. Pushkar-Merta
136. Sardarshahr-Hanumangarh
137. Jolarpettai-Hossur via Krishnagiri
138. Etah-Kasganj
139. Sitapur-Bahraich
140. Haridwar-Kotdwar-Ramnagar
141. Ramnagar-Chaukhutiya
142. Kharagpur-Dhankuni
143. Nasik Dahanu Road
144. Hamirpur- Hamirpur Road
145. Phaphund- Kounch
146. Bharatpur-Deeg-Kama- Kosi
147. Jogigopa to Guwahati via Barpetta- Sarthebari
148. North Lakhimpur- Along -Silapathar
149. Guwahati- Lumding-Tinsukhia- Dibrugarh doubling
150. Hastinapur - Meerut
151. Bacharwan-Lalganj
152. Piran Kaliyar Sharif- Haridwar
153. Sirhind - Nangal Dam
154. Bhiwani- Loharu- Pilani- Churu
155. Pushkar - Merta
156. Digha- Raichak-Kulpi

32
157. Shahganj-Unchahar via Sultanpur, Amethi, Salon
158. Bongaon-Bagdaha
159. Banspani-Bimalgarh-Barsuan
160. Dankuni-Jorgalpara-Furfura Sharif-Jangipara-Bargachia
161. Chikballapur-Sri Satya Sai Prashanthi Nilayam
162. Balurghat-Hilly
163. Salboni-Jhargram via Lalgarh, Belpahari
164. Digha-Jaleswar-Puri
165. Bishnupur-Mukutmonipur
166. Gadag-Haveri
167. Samsi-Dalkhola
168. Krishnanagar-Beharampore via Chapra, Karimpur
169. Gadag-Wadi
170. Tarakeshwar-Magra restoration
171. Shimoga-Harihar
172. Kaliyaganj-Buniadpur
173. Panskura-Ghatal-Chandrakona and Ghatal-Arambagh
174. Anekal Road-Bidadi
175. Namkhana-Bakkhali
176. Pune-Nasik
177. Yadagir-Shahapur-Shorapur-Muddebihal-Alamatti
178. Nanded-Bidar
179. Ramnagar-Chaukhutiya
180. Vishnupuram-Vinukonda
181. Erumeli-Pathanamthitta-Punalur-Thiruvananthapuram
182. Bolangir-Nawapada
183. Mokama-Ara
184. Rewari-Hissar
185. Dankuni-Bally 3rd line
186. Bibinagar-Nallapadu
187. Krishnanagar-Lalgola
188. Bandel-Saktigarh 3rd line
189. Jhansi-Kanpur
190. Rampurhat-Ghumani 3rd line

Rail Tourism
102. We have planned for rail business with Ministry of Tourism. If
successful this year, we will expand the partnership. To improve look of twenty
railway stations and its approaches, the cost will be shared on 50:50 basis. The

33
stations are Hyderabad, Hospet, Agra, Rae Bareli, Belur, Varanasi, Kamakhya,
Haridwar, Dooars, Gaya, Madurai, Tarapith, Thiruvananthapuram, Furfura
Sharief, Amritsar, Aurangabad, Nanded, Puri, Tarakeshwar, Rameshwaram,
Tirupati, Guwahati, Jaipur and Ajmer.

NEW SERVICES

Suburban Services
103. With a view to further enhancing the carrying capacity of suburban
services in Mumbai area, 47 additional services on the Thane-Vashi, Thane-
Panvel, Borivali-Virar, Andheri-Virar, Bandra-Virar and Churchgate-Borivali
sections will be run. It is also proposed to augment 107 suburban services in
Mumbai area from the present 9 car EMUs to 12 Car EMUs.

104. In Chennai area, it is proposed to run 9 additional services on Chennai
Beach-Gummidipundi, Gummidipundi-Chennai Central, Avadi -Chennai
Beach, Chennai Central-Tiruvallur, Tiruvallur-Chennai Central, and Chennai
Beach- Tambaram is proposed to be extended to Chengalpattu.

105. To strengthen the suburban services in Kolkata area, 50 new services will
be introduced including from Howrah-Uluberia, Howrah-Midnapur, Howrah-
Kharagpur, Howrah-Singur, Howrah-Memari, Howrah-Barddhaman, Howrah-
Haripal-Tarakeswar, Howrah-Kolaghat, Howrah-Sarupnagar, Sealdah-
Canning/Jaynagar Majilpur, Sealdah-Kakdwip-Namkhana, Sealdah-Sonarpur,
Sealdah-Baruipur-Diamond Harbour, Sealdah-Barasat-Hasnabad, Sealdah-
Thakurnagar, Sealdah-Barasat-Bongaon, Sealdah-Naihati-Ranaghat-Gede,
Sealdah-Shantipur-Krishnanagar, Sealdah-Kalyani, Sealdah-Barrackpore,
Sealdah-Budge-Budge, Sealdah-Dankuni, Bongaon-Ranaghat-Shantipur,
Howrah-Seoraphuli-Bandel and Sealdah-Basirhat. It is proposed to introduce at
least two suburban services in each of the above sections.

106. It is also proposed to introduce running of peak time local to BBD Bagh
from Bongaon/Krishnanagar. Two non-stop trains between Bardhaman &
Howrah are also proposed.

107. In Secunderabad area, it is proposed to run 10 additional services on
Falaknuma Lingampalli, Lingampalli Hyderabad, and Hyderabad
Falaknuma sections. 83 sub-urban services in Secunderabad area will be
augmented from the present 6-car to 9-car services.

34
108. In Delhi area, it is proposed to run 2 additional services on Delhi
Ghaziabad section.

Duronto trains
109. The following new Duronto trains are proposed to be introduced:

i. Allahabad-Mumbai AC Duronto (bi-weekly)
ii. Pune- Ahmedabad AC Duronto (tri-weekly)
iii. Sealdah Puri non AC Duronto (tri-weekly)
iv. Secunderabad- Visakhapatnam AC Duronto (Tri-weekly)
v. Madurai- Chennai AC Duronto (Bi-weekly)
vi. Chennai - Thiruvananthapuram AC Duronto (Bi-weekly)
vii. Mumbai Central- New Delhi AC Duronto (Bi-weekly)
viii. Nizamuddin-Ajmer non-AC Duronto(Bi-weekly)
ix. Shalimar Patna Duronto (Tri-weekly)

Double Decker AC
110. AC double-decker services are proposed to be introduced on the
following routes:

i. Jaipur- Delhi
ii. Ahmedabad-Mumbai

Shatabdi Express
111. The following new Shatabdi Express trains will be introduced:

i. Pune -Secunderabad
ii. Jaipur-Agra
iii. Ludhiana - Delhi

112. Increase in frequency of Duronto services

i. Mumbai CST-Howrah Duronto Express from 2 days to 4 days (12261/12262)
ii. Mumbai- Ahmedabad Duronto Express from 3 days to daily (12267/12268)
iii. SealdahNew Delhi Duronto Express from 2 days to 5 days (12259/12260)
iv. Nagpur- Mumbai CST Duronto Express from 3 days to daily (12289/12290)
v. Howrah -Yesvantpur Duronto Express from 4 days to 5 days (12245/12246)

35
Vivek Express
113. To mark the 150
th
birth anniversary of Swami Vivekananda which will be
celebrated in 2013, I propose to introduce new trains called Vivek Express.
The first four such trains will be introduced on the following routes:

i. Dibrugarh- Thiruvanthapuram-Kanniyakumari Express (weekly) via
Kokrajhar
ii. Dwarka-Tuticorin Express (weekly) via Wadi
iii. Howrah-Mangalore Express (Weekly) via Palghat
iv. Bandra (T)- Jammu Tawi Express (Weekly) via Marwar-Degana- Ratangarh-
Jakhal- Ludhiana

Kavi Guru Express
114. We are celebrating the 150
th
birth anniversary of Kavi Guru Rabindranath
Tagore this year. As our homage to the great poet, I propose to run the
following Kavi Guru Express trains:

i. Howrah-Azimganj Express (daily) via Sagardighi
ii. Guwahati- Jaipur Express (weekly) via Kasganj Faizabad Gorakhpur -
Kokrajhar
iii. Howrah-Bolpur Express (daily)
iv. Howrah-Porbander Express (weekly)

Rajya Rani Express
115. I propose to introduce a new set of trains connecting state capitals with
important cities/towns in those states:

i. Sawantwadi Road - Mumbai Express (daily)
ii. Saharsa - Patna Intercity Express (daily)
iii. Meerut- Lucknow Intercity Express (daily)
iv. Mysore - Bangalore Express (daily)
v. Damoh - Bhopal Intercity Express (daily)
vi. Silghat Dhubri Intercity Express (tri-weekly via Guwahati Kokrajhar -
Jogighopa)
vii. Bankura Howrah Express (tri-weekly)
viii. Nilambur Road Thiruvananthapuram Link Express (daily)
ix. Jharsuguda Bhubaneswar Express (tri-weekly)
x. Manmad Mumbai Express (daily) via Nasik

36
Janam Bhoomi Gaurav
116. Madam, to take forward our efforts of promoting rail tourism, I propose
to launch special tourist trains called Janam Bhoomi Gaurav. These special
trains connecting important historical and educational places, will run on the
following routes:
i. Howrah - Bolpur - Rajgir (Nalanda) Pataliputra (Patna) - Varanasi
(Sarnath) - Gaya- Howrah
ii. Bangalore-Mysore-Hassan (Space Facility, Belur, Halebid,
Shravanbengola)- Hubli-Gadag (Hampi) - Bijapur (Gole Gumbaz) -
Bangalore
iii. Chennai-Puduchcheri-Tiruchichirappali-Madurai-Kanniyakumari-
Thiruvanthpuram-Ernakulam -Chennai
iv. Mumbai-Ahmedabad-(Lothal)-Bhavnagar(Palitana)-(Alang)-Gir-
Diu(Somnath-Veraval)-(Junagarh)-Rajkot-Mumbai
Express trains
117. I propose to introduce following new express trains:

1. Raebareli-Jaunpur Express (daily)
2. Tirupati-Amravati Express (bi-weekly) via Akola, Nizamabad, Gooty,
Dharmavaram
3. Asansol-Gorakhpur Express (weekly) via Chhapra, Siwan
4. Nagpur -Kolhapur Express (bi-weekly) via Kurduwadi, Latur road, Purna,
Akola
5. Malda Town-Digha Express(weekly) via Rampurhat
6. Pune-Nanded Express(weekly) via Latur
7. Visakhapatnam- Koraput Intercity Express (5 days a week) via Vizianagram
8. Howrah-Secunderabad Express(weekly) via Kharagpur
9. Mumbai- Chandigarh Express(weekly) via Phulera-Ringus- Gurgaon-
Kurukshetra
10. Bardhaman Rampurhat Express (tri-weekly)
11. Bikaner- Delhi Superfast Intercity (daily) via Ratangarh
12. Hyderabad- Darbhanga Express (weekly) via Muri-Jharsuguda-Nagpur
13. Howrah Tirupati Express (weekly)
14. Narsapur- Nagarsol Express(bi-weekly) via Secunderabad, Nizamabad
15. Puri-Shalimar Express(weekly)
16. Ranchi- Pune Express (bi-weekly) via Bilaspur
17. Shalimar-Udaipur Express(weekly) via Katni, Kota

37
18. Chennai- Shirdi Express (weekly) via Bangalore
19. Coimbatore- Tuticorin Link Express (daily)
20. Howrah-Mysore Express (weekly) via Gondia, Adilabad
21. Yesvantpur- Mysore Express (daily)
22. Digha-Visakhapatnam Express(weekly)
23. Mysore- Chennai Express (weekly)
24. Ahmedabad- Yesvantpur AC Express (weekly) via Hubli, Bijapur
25. Bhavnagar- Kochuvelli Express (weekly) via Panvel, Madgaon
26. Gorakhpur- Yesvantpur Express (weekly) via Faizabad, Kanpur, Bhopal,
Kacheguda
27. Bhuj- Dadar Express(bi-weekly)
28. Kolkata-Ajmer Express(weekly) via Asansol
29. Jabalpur- Indore Intercity Express (tri-weekly) via Guna, Bina
30. Porbander- Kochuveli Express (weekly) via Panvel, Madgaon
31. Kolkata-Agra Express(weekly) via Kasganj, Mathura
32. Lucknow- Bhopal Express (weekly)
33. Varanasi-Singrauli Intercity Express (daily)
34. Nagpur Bhusawal Express (tri-weekly ) via Itarsi Khandwa
35. Puri-Gandhidham Express(weekly) via Durg
36. Howrah-Visakhapatnam Express(weekly)
37. Guwahati-Dimapur Express(Daily)
38. Howrah Darbhanga Express (weekly)
39. Vasco-Velankani Express(weekly)
40. Bilaspur-Ernakulam Superfast(weekly)
41. Digha-Puri Express (weekly)
42. Jodhpur-Delhi Express (bi-weekly) via Degana, Ratangarh
43. Kharagpur-Viluppuram Express (weekly) via Vellore
44. Udaipur-Bandra(T) Express(tri-weekly) via Ratlam
45. Purulia Viluppuram Express (weekly) via Midnapore, Kharagpur, Vellore
46. Asansol Gonda Express (weekly) via Chhapra, Mau, Shahganj, Ayodhya
47. Delhi Puducherry Express (weekly)
48. Asansol Tatanagar Exppress (tri-weekly) via Purulia
49. Indore- Kota Intercity Express (daily) via Ruthiyai
50. Bhagalpur Ajmer Express (weekly)
51. Howrah-Jaisalmer Express(weekly) via Rae Bareli, Ratangarh, Lalgarh
52. Ernakulam Bangalore Express (weekly)
53. Mangalore Palghat Intercity Express (daily)
54. Varanasi Ahmedabad Express (weekly) via Ajmer
55. Howrah-Nanded Express (weekly)

38
56. Hardwar Ramnagar Link Express (tri-weekly)

Passenger services
118. The following new passenger services will be introduced:

1. Delhi- Garhi Harsaru-Farukhnagar Passenger (daily)
2. Kendujhargarh- Bhubaneswar Fast Passenger ( 5 days a week)
3. Koraput- Bolangir-Sambalpur Passenger (daily)
4. Barkakhana- Dehri-on-Sone Passenger(daily)
5. Jodhpur- Hissar Fast Passenger (daily)
6. Tirupati- Guntakal Passenger (daily)
7. Coimbatore- Mettupalayam Passenger (6 days a week)
8. Bhuj- Palanpur Passenger (daily)
9. Silghat- Chaparmukh Passenger (daily)
10. Siliguri-Dinhata Passenger (daily)
11. Abohar Fazilka passenger (daily)
12. Bilaspur-Katni Passenger (daily)
13. Raipur Korba Passenger (daily)

DEMU
119. Following new DEMU services will be introduced:

1. Gondia -Ballarshah
2. Vasai road-Diva
3. Ratlam-Neemuch
4. Ratlam-Chittaurgarh
5. Sealdah Jangipur
6. Ahmedabad-Patan
7. Bangalore Cantt-Bangarpet
8. Dharmapuri-Bangalore
9. Marikuppam-Bangarpet
10. New Jalpaiguri-Balurghat
11. Falaknuma-Medchhal
12. Mriyalguda-Nadikudi
13. Kacheguda-Raichur
14. Raichur-Gadwal
15. Radhikapur- New Jalpaiguri
16. Jalna-Nagarsol
17. Nizamabad-Secunderabad

39
18. Kacheguda-Mriyalguda
19. Baripada-Bangariposi
20. Sealdah - Bhagwangola - Lalgola
21. Kolar-Bangalore
22. Krishnanagar Behrampore Court

MEMU
120. The following MEMU services will also be introduced:

1. Ranchi-Asansol
2. Ernakulam Kollam (via Alappuzha)
3. Vasai Road-Panvel
4. Bangarpet -Koppam
5. Falaknuma-Bhongir
6. Midnapore - Jhargram
7. Kollam - Nagercoil
8. Jhargram-Purulia

Extension of trains:
121. The run of the following trains will be extended:

1. Chhindwara-Gwalior Express to Delhi (11101/11102)
2. Jhansi-Chhindwara Express to Delhi (11103/11104)
3. Udaipur-Gwalior Express to Khajuraho (12965/12966)
4. Solapur- Gadag Express to Hubli (11423/11424)
5. Jabalpur-Nagpur Express to Amravati (12159/12160)
6. Nizamuddin- Bapudham Motihari Express to Muzaffarpur (12211/12212)
7. Jammu Tawi-Sonpur Express to Muzaffarpur (12491/12492)
8. Lucknow- Allahabad Express to Vindhyachal (14209/14210)
9. Chandigarh- Jaipur Garib Rath Express to Ajmer (12983/12984)
10. Indore-Ajmer Express to Jaipur (19655/19656)
11. Lucknow- Saharanpur Express to Chandigarh (15011/15012)
12. Chennai Egmore Nagore Express to Karaikal (16175/16176)
13. Visakhapatnam-Nizamabad Express to Nanded (18509/18510)
14. Sambalpur- Nizamabad Express to Nanded (18309/18310)
15. Mysore- Shimoga Town Express to Talguppa (16205/16206)
16. Valsad- Vadodara Express to Dahod (12929/12930)
17. Surat- Bhavnagar Express to Mahuva (19025/19026)
18. Sultanpur Ajmer Express to Ahmedabad (19603/19604)

40
19. Ajmer-Kishanganj Express to New Jalpaiguri (19601/19602)
20. Mumbai-Allahabad Express to Faizabad via Jaunpur, Shahganj (12563/12564)
21. Yesvantapur-Mangalore Express to Karwar (16515/16516)
22. Saharanpur- Delhi to Farukh Nagar (14546/14545)
23. Lucknow Bhopal Express to Pratapgarh (12183/12184)
24. Delhi- Shahjahanpur Passenger to Sitapur Cantt. (54075/54076)
25. Moradabad- Chandausi Passenger to Bareilly (54311/54312)
26. Hajipur- Phulwaria Passenger to Bathua Bazar (55221/55222)
27. Hajipur- Thawe Passenger to Kaptanganj (55007/55008)
28. Nagercoil- Thiruvanthapuram Passenger to Kochuvelli (56318/56317)
29. Hyderabad- Wadi Passenger to Gulbarga (57135/57136)
30. Hubli- Bijapur Passenger to Solapur (56909/56910)
31. Nagda- Kota Passenger to Ratlam (59803/59802)
32. Ambala Una DEMU to Amb Andaura (74991/74992)
33. Ambala Amritsar DEMU to Kurukshetra (74645/74646)

Increase in frequency of trains
122. The frequency of the following trains will be increased:

1. New Delhi-Ajmer Shatabdi Express from 6 days to daily (12015/12016)
2. Nagpur- Ahmedabad Express from weekly to bi-weekly (11453/11454)
3. Nizamuddin -Dehradun AC Express from 6 days to daily (12205/12206)
4. Secunderabad -Bikaner Express from weekly to bi-weekly (17037/17038)
5. New Delhi- Dibrugarh Rajdhani Express from 6 days to daily (12423/12424)
6. Jaipur- Pune Express from weekly to bi-weekly (12939/12940)
7. Rourkela- Bhubaneswar Express from 6 days to daily (18105/18106)
8. Bangalore- Hubli Jan Shatabdi Express from 6 days to daily (12079/12080)
9. Habibganj- Jabalpur Jan Shatabdi Express from 6 days to daily (12061/12062)
10. Delhi Sarai Rohilla- Udaipur Chetak Express from 4 days to daily
(12981/12982)
11. Indore- Udaipur Express from 3 days to daily (19657/19658)
12. Rajkot- Porbander Express from 3 days to daily (19571/19572)
13. Mumbai CST- Mangalore Express from 3 days to daily (12133/12134)
14. Chennai-Tiruchendur Express from weekly to daily (16735/16736)
15. Surat- Amravati Fast Passenger from 2 days to 3 days (59025/59026)
16. Thiruchchirappalli- Karur Passenger from 6 days to daily (76835/76836)
17. Shoranur- Eranakulam Passenger from 6 days to daily (56607/56608)

41
Special Trains
123. Railways often have to meet large spikes in the demand for passenger
traffic during vacations, festivals, Kumbh or other melas etc. In the current year,
we already operated 130 pairs of additional special trains which made 36,000
trips. In the coming summer season, it is planned to operate 8,000 trips to
handle the rush, and a total of 40,000 for the whole year. This not only helps
railways to achieve a healthy growth in passenger earnings but also satisfies to a
large extent the seasonal travel demands. Preparations to cater to the expected
massive demand by pilgrims during Maha Kumbh Mela in 2013 are being
planned.

New Lines
124. I propose to take up the following new line projects in 2011-12:-

1. Murkongselek-Pasighat
2. Rae Bareli Akbarganj
3. Somnath Kodinar
4. Joynagar Durgapur
5. Sultanpur Amethi
6. Mateswar Memari
7. Itahar to Raiganj
8. Bankura Purulia
9. Mellacheruvu Janpahad
10. Bhangankhali and Basanti
11. Bongaon and Poramaheshtala
12. Irphala to Ghatal
13. Nadikudi-Srikalahasti
14. Baruipara to Furfura
15. Madurai-Tuticorin
16. Kalikapur and Minakhan via Ghatakpur
17. Tumkur-Davangiri
18. Chandranagar to Bakkahali
19. Whitefield-Kolar
20. Kakdwip and Budhakhali
21. Bira to Chakla
22. Ratlam-Banswara-Dungarpur
23. Basanti Jharkhali
24. Barabani Churulia
25. Shimoga-Harihar

42
Gauge Conversion
125. The following new gauge conversion works are proposed to be taken up
next year:

i. Baraigram-Dulabchera
ii. Shapur Saradiya
iii. Karimganj Mahisasan
iv. Mehsana Taranga Hill
v. Lucknow-Pilibhit via Sitapur, Mailani
vi. Miyagam-Dabhoi-Samlaya

Doubling
126. The following new doubling works are proposed to be taken up this
year:

1. Kalyan-Kasara - 3rd line
2. Rae Bareli Utratia
3. Bhusawal-Jalgaon - 3rd line
4. Bhagalpur-Pirpainti
5. Ambari Falakata to New Mainaguri
6. Doubling across bridge no. 16,18 & 19 between Kathua-Madhopur
7. Rewari- Manheru
8. Guriya-Marwar & Karjoda-Palanpur
9. Guntur-Tenali
10. Kumblam-Thuravur
11. Plassey-Jiaganj
12. 3rd line between Bandel & Boinchi
13. 3rd line between Sainthia-Tarapith
14. Simhachalam - Gopalapatnam bye-pass line
15. Patch doubling of Aunrihar-Manduadih section
16. Doubling across Beas Bridge between Mirthal-Bhangala
17. Rani Keshav Ganj
18. Ajmer Bangurgram
19. Omalur Metturdam - Patch doubling
20. Toranagallu-Ranjithpura
21. Shivani Hosdurga Road
22. 3rd line between Boinchi & Shaktigarh
23. Kharagpur-Gokulpur
24. Kirandul Jagdalpur
25. Parbhani-Mudkhed

43
26. Vijaywada Gudivada Bhimavaram - Narasapur and Gudivada
Machlipatnam
27. Bina-Kota
28. Viramgram-Samalkhiali

Project Implementation
127. Honble members have been expressing their anguish over delays in
project execution and non-utilisation of funds allotted for works. I fully
appreciate their grievances. Therefore, I propose to set up a Central
Organization for Project Implementation (COPI) with offices in Delhi,
Kolkata, Mumbai and Bangalore, each headed by an officer of GM rank. COPI
will also ensure uniformity of systems and methodologies, follow the best
practices and optimize on resources. Core groups in the four offices will
monitor and ensure the funds allocated to different projects are fully utilized and
not surrendered or diverted and projects completed in a time-frame. They will
also ensure accountability and fix responsibility for non-performance.

New Line Surveys
128. On the basis of requests received from the honble members, state
governments and others, the following surveys are proposed to be taken up in
2011-12:-

1 Bitragunta - Donakonda
2 Adilabad - Armoor
3 Bronachalam - Bellary
4 Poddatur Yerraguntla
5 Karimnagar Hassanparthi
6 Patancheru Adilabad
7 Bhadrachalam Road Visakhapatnam
8 Dimapur-Tizit
9 Bapudham Motihari - Riga
10 Dhamtari - Kanker
11 Rail connectivity to Jowai(Jaintia Hills) with Lokro
12 Dahod - Nathdwara
13 Rail connectivity to Santalpur, Suigam, Vav, Sanchor, Radhanpur
14 Taranga - Abu Road via Ambaji
15 Rail connectivity to Gariawar Taluka in Bhavnagar
16 Surat -Hazira
17 Viramgam -Sankheshwer

44
18 Daman -Nasik
19 Nadiad -Tarapur -Kheda -Matar
20 Tarapur Mahemadabad
21 Ahmedabad -Khedbrahma - Ambaji
22 Mahesana -Harij -Radhanpur
23 Vejalpur Botad
24 Jakhal - Hissar
25 Alwar - Charkhi Dadri
26 Ghatshila Ranchi
27 Simri Bakhtiyarpur - Bihariganj
28 Thakazhy-Tiruvalla
29 Tumkur-Chamarajnagar
30 Kolhapur Dharwar
31 Ramganjmandi Neemuch
32 Laji - Kirnapur
33 Farrukhabad - Shahjahanpur upto Mailani
34 Damoh - Hatanagar - Khajuraho
35 Pandra Road-Gotegaon(Shreedham).
36 Rail connectivity to Fatehabad-Chandravatiganj with Ratlam-Indore project
37 Chhindwara Sagar
38 Rail connectivity of Kolhapur to Konkan Railway
39 Additional suburban line on Virar - Diva - Panvel section
40 Fast corridor on Harbour Line
41 Bye-pass line from Chudawa - Basmat Station
42 Paradip Port - Dhamara Port
43 Bhadrachalam - Kharagpur through Koraput-Talcher-Baripada
44 Rajmahendri - Raipur
45 Salem - Karaikal via Perambalur, Mayiladuthurai
46 Rajpura Junction Chandigarh
47 Dharamkot - Moga
48 Barmer-Palanpur
49 Jaisalmer-Kandla
50 Nagore Falaudi
51 Mannargudi - Pattukkottai
52 Tirupati to Nagore via Kancheepuram.
53 Balrampur - Khalilabad
54 Gwalior - Shahjahanpur via Fetehabad, Katana, Rajpur, Jalalabad
55 Manakpur - Madarsah Majar

45
56 Barabanki - Fatehpur via Deva
57 Kasganj - Etawah via Mainpuri
58 Hasnabad - Machalandapur
59 Kushinagar- Kapilvastu (Nepal)
60 Ghughli - Anandnagar via Maharajganj
61 Dibrugarh-Dangri via New Tinsukia Town
62 Cuddaph - Hindupur via Kadiri
63 Kannur - Mattannur
64 Nandyal - Atmakur via Mahanandi
65 Parumamilla-Bakrapet
66 Thellapur - Patancheru
67 Rail connectivity to Dondi Lohara
68 Sabarmati - Abu Road
69 Palanpur - Bhuj
70 Bhildi Jodhpur
71 Dhrangadhara -Santalpur
72 Palanpur -Ambaji -Abu Road
73 Dhanera -Goradu
74 Tahrad -Vav -Suigam
75 Bharuch -Dahej -Jambusar
76 Rail linkage for Delhi-Mumbai Industrial Corridor in Gujarat
77 Gandhinagar-Prantij
78 Nadiad-Dholka
79 Pirpainti - Jasidih
80 Koppal-Singanur
81 Tiruvalla - Ranny -Pampa
82 Kozhikode-Beypore
83 Nanjangode-Nilambur Road
84 Jabalpur-Udaipura-Sagar
85 Katangi-Tarodi
86 Kolhapur - Rajapur
87 Nagar -Kalyan
88 Karad - Belgaum via Nipani
89 Karaikal - Teralam
90 Karaikal - Sarkazi
91 Nandigram-Hijli Pirbaba via Jelingham
92 Sriperambudur-Guduvanchery with spur to Irun Kattukottai - Avadi-
Sriperumbudur

46
93 Sausar - Pandhurana
94 Talasserry-Mysore
95 Shillong-Chandranathpur
96 Sivok-Mirik
97 Tirap-Lekhapani
98 Silghat-Tezpur
99 Bagnan - Shyampur
100 Hyderabad-Srisailam
101 Secunderabd-Karimnagar via Siddipet
102 Rohtak - Hansi via Meham
103 Ramagundam-Renigunta
104 Sivok-Kalimpong
105 Katwa-Karimganj
106 Nandakumar-Moyna(Bolai Panda)
107 Belda-Narayangarh

Gauge Conversion Surveys
129. Following surveys are proposed to be taken up in 2011-12:-

1. Gwalior - Degond
2. Katosan Bahucharaji-Ranuj
3. Hapa-Dahisar
4. Veraval-Dhasa Jn via Talala-Visavadar-Khijadia

Doubling Surveys
130. Following surveys are proposed to be taken up in 2011-12

1. Pune - Lonavala 3rd line
2. Gutti - Dharmavaram with electrification
3. Rajkot-Viramgam
4. Ahmedabad-Junagarh
5. Rajkot-Surendranagar
6. Birur-Shimoga
7. New Bongaigaon-Rangiya-Kamakhya
8. Irugur-Podanur
9. Macherla-Nadikude
10. Virar - Ahmedabad 3rd line
11. New Bongaigaon-Kamakhya via Goalpara Doubling

47
12. Ahmedabad-Palanpur
13. Rohtak-Bhiwani
14. Hubli-Bangalore
15. Podanur - Palghat 3rd line
16. Ernakulam-Shoranur 4th line

Railway Electrification
131. The honble members will be happy to know that railways would exceed
the original XI Plan target of 3,500 route-km of electrification. In 2011-12, the
following sections covering around 1,000 km are proposed to be electrified:-

i. Vizianagaram-Rayagada-Titlagarh-Raipur
ii. Rosa-Sitapur-Burhwal
iii. Alwar-Rewari

132. In addition to the above, feasibility study for the electrification of the
following sections will be undertaken:

i. Ahmedabad Palanpur Phulera Ringus Rewari - Delhi including
Kandla / Mundra Port Gandhidham - Bhildi-Palanpur and
ii. Amla-Chindwara-Kalumna

133. Madam, I have already outlined the road map, the railways will take in
future. My mind is always with the common people. Railways provide the only
affordable mode of long distance travel. I do not want to further burden them
this year. That is why on behalf of the government I have not increased the
fares for the last two years despite all pressures on our finances.

134. With these words, Madam, I commend the Railway Budget for 2011-12
to the House.

*****

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