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Return to Main Page of Budget 2005-2006

Indian Budget 2005-06
Full Text of P. Chidambaram, Minister of Finance, Budget Speech(Feb 28, 2005)


Empowering the People

11. India is not a poor country, yet a significant proportion of our people are poor. Poverty is not only income poverty. Other indicators of poverty are illiteracy, disease, infant mortality, malnutrition, absence of skills and unemployment. The whole purpose of democratic government is to eliminate poverty and give to every citizen the opportunity to be educated, to learn a skill and to be gainfully employed. The Government holds that it is its sacred duty to empower the poor and eliminate the scourge of poverty.


12. In the last Budget, I had rejected the idea of jobless growth. As I unfold the vision of the UPA Government, Hon’ble Members will note that the central theme that runs through the various schemes and programmes is creation of jobs. Assured irrigation facilities to an additional 1 crore hectares of land over a period of five years will generate employment for an additional 1 crore people at the rate 1 person per hectare. The food processing industry is growing at a rate which generates 2.5 lakh jobs every year. The textile sector alone has the potential to create 1.2 crore jobs over the next 5 years. The information technology (IT) industry is expected to offer an additional 70 lakh jobs by 2009. Construction industry is also expected to throw up lakhs of jobs. Sectors with potential for generating employment will receive the highest attention of the Government.

National Rural Employment Guarantee Scheme

13. After the National Food for Work programme was launched in November 2004, provision was made for the cash component and the foodgrain component. In overall terms, the expenditure in the current year is estimated at Rs.4,020 crore. For 2005-06, a provision of Rs.5,400 crore for the cash component and 50 lakh MT of foodgrains have been made and, in overall terms, the allocation will increase to Rs.11,000 crore. It is Government’s intention to convert this programme into the National Rural Employment Guarantee Scheme. When fully rolled out, the scheme will provide livelihood security for crores of poor families, and I promise to find the money for the programme.

National Rural Health Mission

14. The National Rural Health Mission (NRHM) will be launched in the next fiscal. Its focus will be strengthening primary health care through grass root level public health interventions based on community ownership. The total allocation for the Department of Health and the Department of Family Welfare will increase from Rs.8,420 crore in the current year to Rs.10,280 crore in the next year. The increase will finance the NRHM and its components like training of health volunteers, providing more medicines and strengthening the primary and community health centre system.

15. I am also happy to announce that work on the six AIIMS-like institutions will start next year to augment medical education in deficient States.

Antyodaya Anna Yojana

16. The Antyodaya Anna Yojana now covers 2 crore Below Poverty Line (BPL) families. The number will be increased to 2.5 crore families in 2005-06.


17. The universalization of the Integrated Child Development Services (ICDS) scheme is overdue. It is my intention to ensure that, in every settlement, there is a functional anganwadi that provides full coverage for all children. As on date there are 6,49,000 anganwadi centres. I propose to expand the ICDS scheme and create 1,88,168 additional centres that are required as per the existing population norms. Forty seven per cent of children in the age group 0-3 are reportedly underweight. Supplementary nutrition is an integral part of the ICDS scheme. I propose to double the supplementary nutrition norms and share one-half of the States’ costs for this purpose. I also propose to increase the allocation for ICDS from Rs.1,623 crore in BE 2004-05 to Rs.3,142 crore in BE 2005-06.

Mid-day Meal Scheme

18. The Mid-day Meal Scheme for children has made a promising start throughout the country. 11 crore children are covered today. The Central Government is now providing the cost of food grains as well as the conversion cost at the rate of Re.1 per child. The allocation in BE 2004-05 was Rs.1,675 crore. I propose to increase the allocation for the next year to Rs.3,010 crore.

Sarva Shiksha Abhiyan

19. The Sarva Shiksha Abhiyan programme is the cornerstone of the Government’s intervention in basic education for all children. Sarva Shiksha Abhiyan was allocated Rs.3,057 crore in the Budget Estimates for 2004-05. During the course of the year, I enhanced the allocation to Rs.4,754 crore. A non-lapsable fund called “Prarambhik Shiksha Kosh” has been created for funding this programme. I propose to increase the allocation to Rs.7,156 crore in 2005-06.

Drinking Water and Sanitation

20. All drinking water schemes have now been brought under the Rajiv Gandhi National Drinking Water Mission. In the current year, so far, 31,355 uncovered rural habitations have been provided drinking water facilities. During 2005-06 the emphasis will be on covering more habitations. Emphasis will also be laid on tackling water quality in about 2.16 lakh habitations in Andhra Pradesh, Gujarat, Karnataka, Rajasthan, West Bengal and some other States. I propose to increase the outlay for the Mission from Rs.3,300 crore in the current year to Rs.4,750 crore in the next year.

21. Sanitation, however, remains critically deficient. Only about 30 per cent of the rural households have access to safe sanitation facilities. The Total Sanitation Campaign (TSC) now operates in 452 districts. Government intends to extend the TSC to all districts, and I propose to allocate Rs.630 crore for the next year.

Scheduled Castes and Scheduled Tribes

22. I wish to restate my commitment to inclusive economic growth. It is important to bring scheduled castes and scheduled tribes into the development process. For the first time, you will find in the Budget papers a separate statement on schemes for the development of SCs and STs. The allocation for the programmes is Rs.6,253 crore.

23. The key to empowering the scheduled castes and scheduled tribes is to provide top class education opportunities to meritorious students. The three on-going scholarship schemes for SC/ST students under the Central Plan – pre-Matric, post-Matric, and merit-based – will continue. To provide an added incentive, I propose a new window: a short list of institutes of excellence will be notified, and any SC/ST student who secures admission in one of those institutes will be awarded a larger scholarship that will meet the requirements for tuition fees, living expenses, books and a computer. The details of the scheme will be announced by the ministry concerned.

24. Government will also introduce the Rajiv Gandhi National Fellowship for SC and ST students for pursuing M. Phil and Ph.D. courses in selected universities. I propose to provide funds for 2000 Fellowships per year to be awarded from 2005-06 on the pattern of UGC Fellowships.

Women and Children

25. Last July, I promised to consider gender budgeting. Hon’ble Members will be happy to note that I have included in the Budget documents a separate statement highlighting the gender sensitivities of the budgetary allocations under 10 demands for grants. The total amount in BE 2005-06, according to the statement, is Rs.14,379 crore. Although this is another first in budget-making in India, it is only a beginning and, in course of time, all Departments will be required to present gender budgets as well as make benefit-incidence analyses.


26. Minorities would have to be brought more into the development process. I propose to increase the equity support, as may be required, for the National Minorities Development and Finance Corporation.

27. A certain percentage of new schools that will be opened under the Sarva Shiksha Abhiyan as well as the Kasturba Balika Vidyalaya Scheme will be located in districts or blocks having a substantial minority population. Likewise, a certain proportion of new anganwadi centres will be located in blocks or villages which have a substantial concentration of minorities.

28. Urdu is the mother tongue of a large number of people in Uttar Pradesh and Bihar, but there is very little provision for teaching Urdu. I propose to provide central assistance for recruitment and posting of Urdu language teachers in primary and upper-primary schools that serve a population in which at least one fourth belong to that language group.

29. The Ministry of Social Justice and Empowerment and the Ministry of Human Resource Development implement a number of schemes for pre-examination coaching of candidates belonging to the minority communities. These schemes are confined to Government institutions, and the results have not been encouraging. Hence, I propose to expand these schemes to include reputed private coaching institutes which have a track record of showing good results in competitive examinations. I propose to provide funds to pay the fees on behalf of meritorious candidates from minority communities who enroll in these selected private institutes.

Backward Regions Grant Fund

30. Since the announcement in the last Budget of a Grant Fund for backward districts, a lot of thought has gone into the proposal. An Inter-Ministerial Group (IMG) has identified 170 backward districts based on certain socio-economic variables. The IMG has also proposed that resources under the new facility will be conditional on Panchayati Raj institutions being properly empowered, including devolution of functionaries and funds. I propose to accept the recommendations of the IMG, and I am happy to announce the establishment of a Backward Regions Grant Fund. An allocation of Rs.5,000 crore has been made in the Plan for 2005-06, and an equal amount will be allocated every year in the next four years. Consequent upon the establishment of the Fund, the existing Rashtriya Sam Vikas Yojana (RSVY), envisaged to end in 2006-07, will be wound up with suitable transition arrangements that will protect every district now covered under RSVY.


31. The NCMP refers to special economic packages for Bihar, Jammu & Kashmir and the North Eastern Region. Till now, Bihar received special assistance through the RSVY. The transition arrangements under RSVY will continue until 2006-07. Meanwhile, the backward districts of Bihar will begin to receive assistance from the Backward Regions Grant Fund. I may also point out that, recognizing the needs of Bihar, the TFC has made substantial grants amounting to Rs.7,975 crore for the period 2005-10. Bihar has also been identified as one of the few States requiring special grants for the health and education sectors.

Jammu & Kashmir

32. The Government will provide special plan assistance to Jammu and Kashmir under a recently-approved Reconstruction Plan, in addition to the normal State Plan. As against the current year’s State Plan of Rs.3,008 crore, the size of the State Plan for 2005-06 has been fixed at Rs.4,200 crore. The Baglihar project was allocated Rs.300 crore this year and will be provided adequate funds next year too. The Udhampur—Baramulla rail line will be implemented as a project of national importance.

North Eastern Region

33. All Ministries and Departments are required to allocate at least 10 per cent of their plan budget for schemes and programmes in the North Eastern Region (NER). For 2005-06, this would amount to Rs.9,308 crore. The Kumarghat—Agartala and Lumding—Silchar—Jiribam—Imphal projects will be supported with additional funds outside the railway budget as projects of national importance. A special package for highway development in the NER has also been approved, and I have allocated Rs.450 crore in this behalf.

Rural Infrastructure

34. Government will focus on providing basic infrastructure to the poor, especially those in rural India and in urban slums. The Rural Infrastructure Development Fund which was revived last July will, as in the current year, be provided a corpus of Rs.8,000 crore in 2005-06 also.

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