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Finance Minister Arun Jaitley’s Union Budget 2016 speech

by Autocar Pro News Desk Feb 29, 2016

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Madam Speaker,

I rise to present the Budget for the year 2016-17.

2.I am presenting this Budget when the global economy is in serious crisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015. Financial markets have been battered and global trade has contracted. Amidst all these global headwinds, the Indian economy has held its ground firmly. Thanks to our inherent strengths and the policies of this Government, a lot of confidence and hope continues to be built around India.

3.The International Monetary Fund has hailed India as a ‘bright spot’ amidst a slowing global economy. The World Economic Forum has said that India’s growth is ‘extraordinarily high’. We accomplished this despite very unfavourable conditions and despite the fact that we inherited an economy oflow growth, high inflation and zero investor confidence in Government’s capability to govern. We converted these difficulties and challenges into opportunities.

4. Let us look at our achievements compared to the last three years of the previous Government when growth had decelerated to 6.3%. The growth of GDP has now accelerated to 7.6%. This was possible notwithstanding the contraction of global exports by 4.4% compared to 7.7% growth in world exports during the last three years of the previous Government. CPI inflation was at 9.4% during the last three years of the previous Government. Under our Government, CPI inflation has come down to 5.4%, providing big relief to the public. This was accomplished despite two consecutive years of monsoon shortfall of 13%, compared to normal rainfall in the last three years of the previous Government.

5.Our external situation is robust. The Current Account deficit has declined from 18.4 billion US dollars in the first half of last year to 14.4 billion this year. It is projected to be 1.4% of GDP at the end of this year. Our foreign exchange reserves are at the highest ever level of about 350 billion US dollars.

6.Our initiatives in the last 21 months have not only placed the economy on a faster growth trajectory but have bridged the trust deficit, created by the previous Government. We had to work in an unsupportive global environment, adverse weather conditions and an obstructive political atmosphere.

7.We believe in the principle that money with the Government belongs to the people and we have the sacred responsibility to spend it prudently and wisely for the welfare of our people, especially the poor and the downtrodden. We have increased our Plan expenditure at the RE stage in2015-16 in contrast to the usual practice of reducing it. We achieved this despite adopting the Fourteenth Finance Commission recommendations which increased devolution to the States by 55%.

8.We must now look ahead. The risks of further global slowdown and turbulence are mounting. This complicates the task of economic management for India. It has three serious implications for us. First, we must strengthen our firewalls against these risks by ensuring macro- economic stability and prudent fiscal management. Second, since foreign markets are weak, we must rely on domestic demand and Indian markets toensure that India’s growth does not slow down. And third, we must continue with the pace of economic reforms and policy initiatives to change the lives of our people for the better.

9. We see these challenges as opportunities. The financial years 2015-16 and 2016-17 have been and will be extremely challenging for Government expenditure. The 14th Finance Commission has reduced the Central share of taxes to 58% from the 68%. In the financial year 2015-16, we managed to improve upon the budgeted expenditure due to revenue buoyancy, notwithstanding the steep reduction in the Central share of taxes. The next financial year 2016-17 will cast an additional burden on account of the recommendations of the 7th Central Pay Commission and the implementation of Defence OROP. The Government, therefore, has to prioritise its expenditure. We wish to enhance expenditure in the farm and rural sector, the social sector, the infrastructure sector and provide for recapitalisation of the banks. This will address those sectors which need immediate attention. Once the Government discharges these priority obligations, it shall then focus on other areas which are also of utmost priority to the Government.

10. While increasing the outlay of various social sector programmes, the Government will undertake three major schemes to help the weaker sections of the society. The Pradhan Mantri Fasal Bima Yojana has already been announced to protect the farmer from the adverse consequences of nature. The farmer will pay a nominal amount of insurance premium and get the highest ever compensation in the event of any loss suffered. A health insurance scheme which protects one-third of India’s population against hospitalisation expenditure is also being announced. The Government is also launching a new initiative to ensure that the BPL families are provided with a cooking gas connection, supported by a Government subsidy. This will significantly improve the health of women and those BPL families who suffer adversely from the ill-effects of Chulha cooking.

11.The Annual Budget is also an opportunity for the Government to outline its priorities for the year to come. The priority of our Government is clearly to provide additional resources for vulnerable sections, rural areas and social and physical infrastructure creation. The Government shall also endeavour to continue with the ongoing reform programme and ensure the passage of the Constitutional amendments to enable the implementation of the Goods and Service Tax, the passage of Insolvency and Bankruptcy law and other important reform measures which are pending before the Parliament.

12.Additionally, as I will elaborate later, we will undertake significant reforms, such as the enactment of a law to ensure that all Government benefits are conferred upon persons who deserve it, by giving a statutory backing to the AADHAR platform; bringing significant changes in the legislative framework relating to the transport sector so as to free it from constraints and restrictions; incentivising gas discovery and exploration by providing calibrated marketing freedom; enactment of a comprehensive law to deal with resolution of financial firms; providing legal framework for dispute resolution in PPP projects and public utility contracts; undertaking important banking sector reforms and public listing of general insurance companies; and undertaking significant changes in FDI policy.

13.Our agenda for the next year is, therefore, to ‘Transform India’ in thisdirection. My Budget proposals are, therefore, built on this transformative agenda with nine distinct pillars. These include:

(i)Agriculture and Farmers’ Welfare: with focus on doubling farmers’ income in five years;

(ii)Rural Sector: with emphasis on rural employment and infrastructure;

(iii)Social Sector including Healthcare: to cover all under welfare and health services;

(iv)Education, Skills and Job Creation: to make India a knowledge based and productive society;

(v)Infrastructure and Investment: to enhance efficiency and quality of life;

(vi)Financial Sector Reforms: to bring transparency and stability;

(vii)Governance and Ease of Doing Business: to enable the people to realise their full potential;

(viii)Fiscal Discipline: prudent management of Government finances and delivery of benefits to the needy; and

(ix)Tax Reforms: to reduce compliance burden with faith in the citizenry.

In each of these themes, I shall outline specific policy measures and initiatives which would have a transformative impact on our economy and the lives of our people.

I. Agriculture and Farmers' Welfare

14. Let me first take up Agriculture and Farmers’ Welfare. We are grateful to our farmers for being the backbone of the country’s food security. We need to think beyond ‘food security’ and give back to our farmers a sense of ‘income security’. Government will, therefore, reorient its interventions in the farm and non-farm sectors to double the income of thefarmers by 2022. Our total allocation for Agriculture and Farmers’ welfare is 35,984 crore.

15.We need to address issues of optimal utilisation of our water resources; create new infrastructure for irrigation; conserve soil fertility with balanced use of fertilizer; and provide value addition and connectivity from farm to markets.

16.Irrigation is a critical input for increasing agriculture production and productivity. Out of 141 million hectares of net cultivated area in the country, only 46% is covered with irrigation.

17.The ‘Pradhan Mantri Krishi Sinchai Yojana’ has been strengthened and will be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation under this Scheme.

18.Implementation of 89 irrigation projects under AIBP, which have been languishing, will be fast tracked. This will help to irrigate 80.6 lakh hectares. These projects require `17,000 crore next year and `86,500 crore in the next five years. We will ensure that 23 of these projects are completed before 31st March, 2017.

19.A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about `20,000 crore. To achieve all these, a total provision of `12,517 crore has been made through budgetary support and market borrowings in 2016-17.

20.Simultaneously a major programme for sustainable management of ground water resources has been prepared with an estimated cost of`6,000 crore and proposed for multilateral funding.

21.At least 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up by making productive use of the allocations under MGNREGA.

22.The Soil Health Card Scheme is now being implemented with greater vigour. Through this, farmers get information about nutrient level of the soil and can make judicious use of fertilizers. The target is to cover all 14 crore farm holdings by March 2017. `368 crore has been provided for National Project on Soil Health and Fertility. Besides, 2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years. Fertilizer companies will also co-market city compost which increases the efficacy of chemical fertilizer. A policy for conversion of city waste into compost has also been approved by the Government under the Swachh Bharat Abhiyan.

23.To increase crop yields in rain fed areas, which account for nearly 55% of the country’s arable land, organic farming is being promoted. Towards this end, the Government has launched two important schemes.

First, the ‘Parmparagat Krishi Vikas Yojana’ which will bring 5 lakh acres under organic farming over a three year period. Second, the Government has launched a value chain based organic farming scheme called “Organic Value Chain Development in North East Region”. The emphasis is on value addition so that organic produce grown in these parts find domestic and export markets. A total provision of `412 crore has been made for these schemes.

24.Incentives are being given for enhancement of pulses production.`500 crores under National Food Security Mission has been assigned to pulses. The number of districts covered has been increased to 622.

25.A national level competition will be held among 674 Krishi Vigyan Kendras with a total prize money of `50 lakh to improve the efficiency and performance of these Kendras.

26.Access to markets is critical for the income of farmers. The Government is implementing the Unified Agriculture Marketing Scheme which envisages a common e-market platform that will be deployed in selected 585 regulated wholesale markets. Amendments to the APMC Acts of the States are a pre-requisite to join this e-platform. I am happy to inform that 12 States have already amended their APMC Acts and are ready to come on board. More States are expected to join this platform in the coming year.

The Unified Agricultural Marketing E Platform will be dedicated to the Nation on the birthday of Dr. Baba Saheb Ambedkar on 14th April this year.

27. 97 lakh MT of storage capacity was added to the Central pool stock during the current year.

28. We are implementing the Pradhan Mantri Gram Sadak Yojana (PMGSY) as never before. This Scheme had suffered in the past because of underfunding. The allocations in 2012-13 and 2013-14 were only `8,885 crore and `9,805 crore respectively. We have substantially increased the allocation in the last two years and have now allocated `19,000 crore in2016-17. Together with States’ share, totally about `27,000 crore will be spent on this Yojana in 2016-17. Our goal is to advance the completion target of the programme from 2021 to 2019 and connect the remaining 65,000 eligible habitations by constructing 2.23 lakh kms of roads. Accordingly, the pace of construction which is currently 100 kms per day, as compared to the average of 73.5 kms during 2011-14, will be substantially stepped up.

29.To support farmers in the aftermath of natural calamities, Government has revised the norms of assistance under the National Disaster Response Fund in April 2015.

30.Special focus has been given to ensure adequate and timely flow of credit to the farmers. Against the target of `8.5 lakh crore in 2015-16, the target for agricultural credit in 2016-17 will be an all-time high of `9 lakh crore. To reduce the burden of loan repayment on farmers, a provision of`15,000 crore has been made in the BE 2016-17 towards interest subvention.

31.Government has approved the path breaking Crop Insurance Scheme, namely, Prime Minister Fasal Bima Yojana. For effective implementation of this Scheme, I have provided a sum of `5,500 crore in the Budget 2016-17.

32.We have to ensure that the benefit of MSP reaches farmers in all parts of the country. Three specific initiatives will be taken up in 2016-17for this. First, the remaining States will be encouraged to take up decentralized procurement. Second, an online Procurement System will be undertaken through the Food Corporation of India. This will usher in transparency and convenience to the farmers through prior registration and monitoring of actual procurement. Third, effective arrangements have been made for pulses procurement.

33.Farmers also take up other allied activities to supplement their family

income. To make dairying more remunerative to the farmers, four new projects will be taken up: first, the ‘Pashudhan Sanjivani’, an animalwellness programme and provision of Animal Health Cards (‘Nakul Swasthya Patra’); second, an Advanced breeding technology; third,Creation of ‘E-Pashudhan Haat’, an e market portal for connecting breeders and farmers; and fourth, a National Genomic Centre for indigenous breeds. These projects will be implemented at a cost of `850 crores over the next few years.

34. There has been a visible rise in the yield of honey, from an average of 18 to 20 kg per box per annum in the year 2013-14 to 25 kg per box per annum by 2015-16. The total production of honey in the country has increased from 76,150 metric tonnes in 2014-15 to 86,500 metric tonnes. 90% of the domestic honey is now exported.

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