Highlights of the Budget

Finance Minister P Chidambaram presented the 2006-07 Union Budget in Parliament on Tuesday.

Presenting the Budget the FM described 2005 as: The best of times and worst of times.

He projected the GDP to grow at 8 per cent and manufacturing at 9 per cent. Savings up 21.9 per cent of GDP. Agriculture growth, he said was up 2.1 per cent.

Prospect for 2006 are just as good said the FM. This year has seen many natural disasters and the government has come good with rehabilitation, he added.

Government's aim is to ensure montetary stability and managing external debt. Rs 11,700 crore to be spent on rural employment in the current year.

Highlights

In the backdrop of C Rangarajan Committee report, Government urges for consensus in Parliament on subsidies in fertiliser, petrol and food.

The allocation to the states from the central pool of revenue as per the 12th Finance Commission has been stepped up to Rs 1,03,710 crore (Rs 1037.10 billion) in 2006-07 as against Rs 94,402 crore (Rs 944.02 billion) in 2005-06.

With the implementation of the 12th Finance Commission recommendations, state finances have substantially improved.

The compensation provision for loss of revenue to states with the implementation of VAT has been put at Rs 3000 crore (Rs 30 billion).

Revenue deficit to be 2.1 per cent of GDP. Fiscal deficit 3.8 per cent of GDP im 2006-07.

After 20 years gross fiscal deficit is less that gross budgetary deficit.

Plan expenditure has gone up to 30.6 per cent.

The defence budget raised to Rs 89,000 crore (Rs 890 billion) in 2006-07 from Rs 83,000 crore (Rs 830 billion) in the current year. Of this Rs 37,458 crore (Rs 374.58 billion) would be capital expenditure.

Rs 100 crore (Rs 1 billion) special grant for Punjab Agricultural University as a centre of excellence for its commendable work in agricutural research.

500 ITIs to be upgraded in five years. Work has already started in 100 ITIs and would be taken up in the remaining 400 institutes soon. Rs 97 crore (Rs 970 million) allocated in 2006-07.

Special assistance of Rs 848 crore (Rs 8.48 billion) for Jammu and Kashmir for its reconstruction fund, including Rs 230 crore (Rs 2.30 billion) for Baglihar project. This will be in addition to 2006-07 state plan of Rs 2,300 crore (Rs 23 billion).

Rs 10 crore (Rs 100 million) allocated for preparatory work for celebrating the 150th anniversary of the First War of Independence of 1857 in a befitting manner.

To safeguard old art forms, Vedic chanting and Ram Lila have been declared UNESCO heritage and will be granted Rs 5 crore (Rs 50 million).

Comprehensive Insurance Regulatory and Development Authority bill to be introduced in 2006-07 incorporating the recommendations of K P Narasimhan Committee on insurance sector revamp. The committee has already submitted its report to government and IRDA is studying its recommendations.

An Investors Protection Fund will be set up and funded by fines and penalties to safeguard the interests of retail investors.

FII investment limit in stock markets will be raised from $1.75 billion to $2 billion to deepen, strengthen and broaden the market.

Raise in the aggregate investment of overseas investors from $1 billion to $2 billion is propsed.

An investment protection fund under the aegis of SEBI would be set up.

Rs 50 cr (Rs 500 million) for Mumbai, Kolkata, Chennai varsities.

Eighty two power projects are in various stages of implementation in the country to overcome power shortage. This when completed in 1 to 3 years will generate 33,000 mws of power in PSUs and 6500 mws in private sector. Of this, 15,000 mw of power generation is to be installed by March 2007.

Five mega power projects of Rs 4000 crore (Rs 40 billion) each is to be set up for which clearance is to be given by March 31, 2006. Of this, one each will come in Chhattisgarh and MP. The remaining three will be in coastal areas of Maharashtra, Karnataka and Gujarat.

NHAI to be reconstituted to make it more effective.

A new deep draft port to be set up in West Bengal. A study is to be conducted.

The National Institute of Port Management in Chennai to be renamed as National Maritime Academy and converted into a Central University with branches in Mumbai, Viskhapatnam and Kolkata.

Old age pension to be increased to Rs 200 per month for above 75 years of age.

Allocation for it put at Rs 1430 crore (Rs 14.3 billion) from the Centre and the state government to provide matching contribution.

Rajiv Gandhi drinking water programme to get Rs 4680 crore (Rs 46.8 billion) next year as against Rs 3645 crore this year.

National Health Mission allocation increased to Rs 8207 crore (Rs 82.07 billion) in next fiscal from Rs 6,553 crore (Rs 65.53 billion) this year.

Government plans to eradicate polio by December 2007, Chidambaram said.

The Finance Minister said that Rs 14,300 crore (Rs 143 billion) for rural employment programme would be scheduled during 2006-07, out of which Rs 11,300 crore (Rs 113 billion) for NREG programme and Rs 3,000 crore (Rs 30 billion) for SGRY.

New towns to be established on specific themes.

For gender budgeting under various heads, Rs 28,737 crore (Rs 297.37 billion) has been allocated.

Special schemes to be announced for STs and SCs for their development.

India to be made a manufacturing hub for textiles, steel, metals and petroleum products.

Maulana Azad Educational Foundation corpus doubled to Rs 200 crore (Rs 2 billion) for greater financial support to organizations involved in minority welfare.

Allocation for national Urdu education programme increased to Rs 13 crore (Rs 130 million) from Rs 10 crore (Rs 100 million) this year.

Separate window for tenant farmers to ensure loan share. Agri credit proposed to be increased to Rs 175,000 crore (Rs 1750 billion) next year as against Rs 1,41,500 crore (Rs 1415 billion), covering additional 50 lakh farmers.

Farmers to receive short term credit at 7 per cent.

Budgetary loan for PSEs has been fixed at Rs 16901 crore (Rs 169.01 billion) including Rs 2791 crore ( Rs 27.91 billion) for Railways.

Ninety-six per cent of the golden quadrilateral would be completed by June 2006 and the corridor would be completed by the end of 2008.

Six lakh hectares of irrigation potential expected to be created this year. Rupees nine hundred and forty-four crore (Rs 9.44 billion) released this year under the Accelerated Irrigated Benefit Programme.

Allocation on education increased by 31.5 per cent to over Rs 24,150 crore (Rs 241.5 billion) and that for healthcare raised by 22 per cent to Rs 12, 546 crore (Rs 125.46 billion).

Entire Rs 1,100 crore (Rs 11 billion) for rural electrification released this year and 10,366 villages to be electrified.

Five lakh additional class rooms to be constructed and 150,000 additional teachers to be appointed.

Larger budgetary support will be given to Bharat Nirmal Programme: Rs 18696 crore (Rs 186.96 billion) to be given which represents a hike of 54 per cent.

Total budget for north-eastern region will be Rs 12,041 crore (Rs 120.41billion) including Rs 1,350 crore (Rs 13.5 billion) for the ministry of north-east development.

A massive immunisation programme will be launched to eradicate polio completely by 2007.

Allocation for mid-day meal scheme to be enhanced to Rs 4813 crore (Rs 48.13 billion) next fiscal as against Rs 3014 crore (Rs 30.14 billion) this year.

Gross budgetary support for annual plan expenditure has been raised to Rs 1,74,725 crore (Rs 1747.25 billion) for 2006-07 as against Rs 1,43,497 crore (Rs 1434.97 billion), an increase of 20.4 per cent.

Likewise for the central plan increased to Rs 1,31,285 crore (Rs 1312.85 billion) next fiscal.

Eight flagship programmes of the UPA including Sarva Shiksha Abhiyan and Mid-Day Meal Scheme will get a total allocation of Rs 60,015 crore (Rs 600.15 billion) in 2006-07 as against Rs 34,927 crore (Rs 349.27 billion) in the current year.

Metro in Hyderabad to be considered.