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Extracts of Finance Minister’s reply in Lok Sabha to debate on Union Budget 2009-10

The following are the extracts from the reply of Finance Minister, Shri Pranab Mukherjee to the debate on the Union Budget 2009-10 in Lok Sabha on 14th July 2009:-

“I rise to reply to the debate on the Union Budget 2009-10, which I presented on 6th July 2009. I am grateful to the Hon. Members for taking active part in the debate and making valuable contribution. Especially so, when the first-timers and young Members in their maiden speeches have raised pertinent issues that are of common concern to all of us.

2. The performance of UPA in the last five years has raised the expectations of our people - the farmers, the small business, our entrepreneurs, the youth and the vulnerable segments of our population, and even that of our global collaborators and the foreign investors. In the best of times these expectations could rests heavily on the shoulders of the Government. And these are not the best of times. However, just as we have not been found wanting in the past, we shall respond to the challenges and create opportunities to meet the aspirations of our people.

3. As I mentioned in my budget speech, there are some early indications of recovery in the global economy and the Indian economy is also showing signs of pick-up, though uncertainties remain on several fronts.

4. Some positive signs in the Indian economy are:

Production of major steel producers (SAIL, Tata Steel and RINL) registered a growth of 13% in June, 2009 (YoY). Cement production increased by 13.1% in june, 2009 (YoY). Sales of automobile sector have registered a growth of 14.3% in the month of June, 2009. This was driven by the demand in two wheelers at 17.4% in June, 2009. This reflects greater purchasing power with the middle income groups, easier availability of credit and affordability.

Consumer goods continued to record a double-digit growth at 12.4% in May 2009 over the corresponding period of the previous year.

Number of mobile phone connections in May 2009 increased by 49% (YoY). Approximately 12 million mobile connections were added during the month.

On Agriculture

Apprehensions are being expressed on the gross neglect of Agriculture. I would like to remind my friends that it was during the regime of the UPA Government that Agriculture grew at a rate of about 4% per annum with substantial increase in the plan allocation and capital formation in the sector.

The steps taken to boost the Agriculture sector are:

i) Target of Agricultural credit for the year 2009-10 is being raised to Rs.3,25,000 cr. as against Rs.2,87,000 cr. in 2008-09.

ii) Short term crop loans of upto Rs.3 lakh per farmer are being given at a concessional rate of 7%. This is being lowered to 6% for those farmers, who repay their loans on schedule.

iii) Under the Agricultural Debt Waiver and Debt Relief Scheme 2008, the farmers having more than 2 hectares of land were given time upto 30th June, 2009 to pay 75% of their overdues. Due to the late arrival of the monsoon, this period has been extended by six months upto 31st December, 2009.

iv) It is proposed to extend investment linked tax incentives to the business of setting up and operating ‘Cold Chain’ warehousing facilities for storing agricultural produce. Under this method, all capital expenditure other than expenditure on land, goodwill and financial instruments will be fully allowable as deductions.

v) Some doubts have been raised about the inadequacy of the financial provision for the agriculture sector and farmers in Budget 2009-10. It was mentioned by an Hon. Member that only 1% of total expenditure of Rs.10,20,838 cr. has been earmarked for agricultural sector. If we go into the details of various expenditure provisions, Hon. Members will notice that more than 24% of the total expenditure after excluding interest payments, defence expenditure, and salary and pension related expenditure is directly or indirectly going to the agriculture sector of the economy.

In recent weeks, there have been some concerns on the progress of monsoon. The Government is monitoring the situation on a daily basis and is ready to implement its contingency plan, if required.

On Infrastructure

1. Infrastructure is high priority area. Investment in infrastructure will raise the capacity for rapid growth and employment generation. Rural infrastructure is of special importance, as it will disperse incomes and bring prosperity n the rural areas. Through the four fiscal packages announced so far (including the 6th July Budget Speech package), the Central Government has given an overall stimulus of nearly Rs.2,18,000 crore to the economy. Bulk of this is being directed towards investment in infrastructure, both urban and rural, as well as ‘Aam Admi’ centric programmes, like NREGA, Pradhan Mantri Adarsh Gram Yojana, Bharat Nirman, etc.

2. To give an example, the plan outlays for rural and urban infrastructure have increased from Rs.62,647 crore in BE 2008-09 to Rs.1,24,038 crore in BE 2009-10 marking an increase of 98%.

3. The outlays for women centric programmes across sectors have increased from Rs.27,662 crore in 2008-09 to Rs.56,858 crore in 2009-10, an increase of 105%.

4. The outlays for minorities have increased from Rs.1000 crore in 2008-09 to Rs.1740 crore in 2009-10, an increase of 74%.

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