1. I rise to present the Budget for the year 2013-14.
2. I recall my last tenure as Finance Minister and acknowledge
with gratitude the splendid support that I received from all
sections of the House as well as the people of India. Today, more
than ever, I seek the same support as we navigate the Indian
economy through a crisis that has enveloped the whole world and
3. I intend to keep my speech simple, straight forward and
I. THE ECONOMY AND THE CHALLENGES
4. I shall begin by setting the context. Global economic growth
slowed from 3.9 percent in 2011 to 3.2 percent in 2012. India is
part of the global economy: our exports and imports amount to 43
percent of GDP and two-way external sector transactions have risen
to 108 percent of GDP. We are not unaffected by what happens in
the rest of the world and our economy too has slowed after
2010-11. In the current year, the CSO has estimated growth at 5
percent while the RBI has estimated growth at 5.5 percent.
Whatever may be the final estimate, it will be below India's
potential growth rate of 8 percent. Getting back to that growth
rate is the challenge that faces the country.
5. Let me say, however, there is no reason for gloom or pessimism.
Even now, of the large countries of the world, only China and
Indonesia are growing faster than India in 2012-13. And in
2013-14, if we grow at the rate projected by many forecasters,
only China will grow faster than India. Between 2004 and 2008, and
again in 2009-10 and 2010-11, the growth rate was over 8 percent
and, in fact, crossed 9 percent in four of those six years. The
average for the 11th Plan period, entirely under the UPA
Government, was 8 percent, the highest ever in any Plan period.
Achieving high growth, therefore, is not a novelty or beyond our
capacity. We have done it before and we can do it again.
6. I acknowledge that the Indian economy is challenged, but I am
absolutely confident that, with your cooperation, we will get out
of the trough and get on to the high growth path. I shall now
outline our plans and priorities.
7. Our goal is 'higher growth leading to inclusive and sustainable
development'. That is the mool mantra.
8. Growth is a necessary condition and we must unhesitatingly
embrace growth as the highest goal. It is growth that will lead to
inclusive development, without growth there will be neither
development nor inclusiveness. However, I may sound a note of
caution. Owing to the plurality and diversity of India, and
centuries of neglect, discrimination and deprivation, many
sections of the people will be left behind if we do not pay
special attention to them. As Joseph Stiglitz, Nobel prize-winning
economist, said, "There is a compelling moral case for equity; but
it is also necessary if there is to be sustained growth. A
country's most important resource is its people." We have examples
of States growing at a fast rate, but leaving behind women, the
scheduled castes, the scheduled tribes, the minorities, and some
backward classes. The UPA does not accept that model. The UPA
Government believes in inclusive development, with emphasis on
improving human development indicators. I hope this Budget will be
yet another testimony to that commitment.
Fiscal Deficit, Current Account Deficit and Inflation
9. The purpose of a Budget - and the job of a Finance Minister -
is to create the economic space and find the resources to achieve
the socio economic objectives. At present, the economic space is
constrained because of a high fiscal deficit; reliance on foreign
inflows to finance the current account deficit; lower savings and
lower investment; a tight monetary policy to contain inflation;
and strong external headwinds. During the course of my speech, I
shall spell out measures that will address each of these issues.
10. In September, 2012, Government accepted the main
recommendations of the Dr. Vijay Kelkar Committee. A new fiscal
consolidation path was announced. Red lines were drawn for the
fiscal deficit at 5.3 percent of GDP this year and 4.8 percent of
GDP in 2013-14. I know there is a lot of scepticism. In a little
while, I shall tell you how we have fared.
11. My greater worry is the current account deficit (CAD). The CAD
continues to be high mainly because of our excessive dependence on
oil imports, the high volume of coal imports, our passion for
gold, and the slow down in exports. This year, and perhaps next
year too, we have to find over USD 75 billion to finance the CAD.
There are only three ways before us: FDI, FII or External
Commercial Borrowing (ECB). That is why I have been at pains to
state over and over again that India, at the present juncture,
does not have the choice between welcoming and spurning foreign
investment. If I may be frank, foreign investment is an
imperative. What we can do is to encourage foreign investment that
is consistent with our economic objectives.
12. Finally, the development must be sustainable - economically
and ecologically. The development model must have democratic
legitimacy and approval.
13. Looming large over our efforts to stimulate growth is
inflation. Some inflation is imported. Supply demand mismatch, for
example in oilseeds and pulses, also pushes up inflation.
Aggregate demand is another cause of inflation. The battle against
inflation must be fought on all fronts. Our efforts in the past
few months have brought down headline WPI inflation to about 7.0
percent and core inflation to about 4.2 percent. It is food
inflation that is worrying, and we shall take all possible steps
to augment the supply side to meet the growing demand for food
14. Government expenditure boosts aggregate demand and it has both
good and bad consequences. Wisdom lies in finding the correct
level of government expenditure. In the budget for 2012-13, the
estimate of Plan Expenditure was too ambitious and the estimate of
non-Plan Expenditure was too conservative. Faced with a huge
fiscal deficit, I had no choice but to rationalise expenditure. We
took a dose of bitter medicine. It seems to be working. We also
took some policy decisions that had been deferred for too long,
corrected some prices, and undertook a review of certain tax
policies. We have retrieved some economic space. As I outline our
plans and priorities, Hon'ble Members will find that I have used
that economic space to advantage - and to advance the UPA
Government's socio-economic objectives.
II. THE PLAN AND BUDGETARY ALLOCATIONS
15. The 12th Five Year Plan began in 2012-13. Anticipating a
global and domestic recovery, total expenditure had been fixed at
Rs 14,90,925 crore. Due to the slowdown and the austerity
measures, the revised estimate is Rs 14,30,825 crore or 96 percent
of the budget estimate. The economic space that we have gained has
given me the confidence to be more ambitious in 2013-14. I have
been able to set the BE of total expenditure at Rs 16,65,297 crore
and of plan expenditure at Rs 5,55,322 crore. Hon'ble Members will
be happy to know that plan expenditure in 2013-14 will be 29.4
percent more than the revised estimate of the current year. All
flagship programmes have been fully and adequately funded. I dare
say I have provided sufficient funds to each Ministry or
Department consistent with their capacity to spend the funds. Now,
it is over to the Ministries and Departments to deliver the
outcomes through good governance, prudent cash management, close
monitoring and timely implementation.
16. Madam Speaker, on the one side is economic policy. On the
other side is economic welfare. We are a developing country. The
link between policy and welfare can be expressed in a few words:
opportunities, education, skills, jobs and incomes. Every mother
understands this. Every young man and woman understands this. My
budget for 2013-14 has before it one overarching goal: to create
opportunities for our youth to acquire education and skills that
will get them decent jobs or self-employment that will bring them
adequate incomes that will enable them to live with their families
in a safe and secure environment.
SC, ST, Women and Children
17. Let me assure Hon'ble Members that their concerns are my
concerns too. I know their concern for the welfare and progress of
the scheduled castes and the scheduled tribes for whom the Budget
has sub plans. I also know their concern that adequate funds must
be provided for programmes that benefit women, children and the
minorities. I have tried to meet these concerns as fully as
possible. I propose to allocate Rs 41,561 crore to the scheduled
caste sub plan and Rs 24,598 crore to the tribal sub plan. The
total represents an increase of 12.5 percent over the BE and 31
percent over the RE of the current year. I reiterate the rule that
the funds allocated to the sub plans cannot be diverted and must
be spent for the purposes of the sub plans.
18. I have made sufficient allocations to programmes relating to
women and children. Hon'ble Members will find from the budget
documents that the gender budget has Rs 97,134 crore and the child
budget has Rs 77,236 crore in 2013-14.
19. Women belonging to the most vulnerable groups, including
single women and widows, must be able to live with self-esteem and
dignity. Young women face gender discrimination everywhere,
especially at the work place. Ministry of Women and Child
Development has been asked to design schemes that will address
these concerns. I propose to provide an additional sum of Rs 200
crore to that Ministry to begin work in this regard.
20. I have allocated Rs 3,511 crore to the Ministry of Minority
Affairs. This is an increase of 12 percent over the BE and 60
percent over the RE of 2012-13.
21. The Maulana Azad Education Foundation is the main vehicle to
implement educational schemes and channelize funds to
non-government organisations for the minorities. Its corpus stands
at Rs 750 crore. With the objective of raising it to Rs 1,500
crore during the 12th Plan period, I propose to allocate Rs 160
crore to the corpus fund. The Foundation wishes to add medical aid
to its objectives. I have accepted that a beginning can be made by
providing medical facilities such as an infirmary or a resident
doctor in the educational institutions run or funded by the
Foundation. I propose to allocate Rs 100 crore to launch this
22. Government is committed to provide support to persons with
disabilities. I propose to allocate a sum of Rs 110 crore to the
Department of Disability Affairs for the ADIP Scheme in 2013-14,
as against the RE of Rs 75 crore in the current year.
Health and Education
23. Health for all and education for all remain our priorities.
24. I propose to allocate Rs 37,330 crore to the Ministry of
Health and Family Welfare. Of this, the new National Health
Mission that combines the rural mission and the proposed urban
mission will get Rs 21,239 crore, an increase of 24.3 percent over
25. I propose to provide Rs 4,727 crore for medical education,
training and research.
26. The National Programme for the Health Care of Elderly is being
implemented in 100 selected districts of 21 States. Eight regional
geriatric centres are being funded for the development of
dedicated geriatric departments. I propose to provide Rs 150 crore
for this programme.
27. Ayurveda, Unani, Siddha and Homoeopathy are being mainstreamed
through the National Health Mission. I propose to allocate Rs
1,069 crore to the Department of AYUSH.
28. The six AIIMS-like institutions have admitted their first
batch of students in the academic session that commenced in
September 2012. The hospitals attached to the colleges will be
functional in 2013-14. I propose to provide a sum of Rs 1,650
crore for these institutions.
29. Education is the other high priority. I propose to allocate Rs
65,867 crore to the Ministry of Human Resource Development, which
is an increase of 17 percent over the RE of the previous year. The
Sarva Shiksha Abhiyan (SSA) and the Right to Education Act are
firmly in place. I propose to provide Rs 27,258 crore for SSA in
30. Investment in the Rashtriya Madhyamik Shiksha Abhiyan (RMSA)
cannot be postponed any longer. Hence, I propose to provide Rs
3,983 crore for RMSA, which is an increase of 25.6 percent over
the RE of the current year.
31. Hon'ble Members will be happy to know that thousands of
scholarships will be given to students belonging to Scheduled
Castes, Scheduled Tribes, Other Backward Classes and Minorities,
and girl children, in 2013-14. I propose to allocate Rs 5,284
crore to the various Ministries for the purpose, as compared Rs
4,575 crore in the RE of the current year.
32. The Mid-Day Meal Scheme (MDM) will be provided Rs 13,215 crore.
33. The reconstruction of the Nalanda University has gathered
momentum. The Government is committed to the creation of Nalanda
University as a centre of educational excellence.
34. I commend the ICDS for being able to spend the entire amount
of Rs 15,850 crore provided in 2012-13. In recognition of the
needs of children, I propose to allocate Rs 17,700 crore in
2013-14, representing an increase of 11.7 percent. The focus will
continue to be on early childhood care and education.
35. Maternal and child malnutrition in a country with abundant
foodgrains is a shame that we must overcome. A multi-sectoral
programme that was announced last year will be implemented in 100
districts during 2013-14 and it will be scaled up to cover 200
districts the year after. I propose to allocate a sum of Rs 300
crore for the programme in 2013-14.
36. Clean drinking water and sanitation have a number of
beneficial externalities. I propose to allocate Rs 15,260 crore to
the Ministry of Drinking Water and Sanitation, as against the RE
of Rs 13,000 crore in the current year.
37. There are still 2,000 arsenic- and 12,000 fluoride-affected
rural habitations in the country. I propose to provide Rs 1,400
crore towards setting up water purification plants.
38. The Ministry of Rural Development steers a number of flagship
programmes. We estimate that they will be able to spend Rs 55,000
crore before the end of the current year, and I propose to
allocate Rs 80,194 crore in 2013-14, marking an increase of 46
percent. MGNREGS will get Rs 33,000 crore, PMGSY will get Rs
21,700 crore, and IAY will get Rs 15,184 crore.
39. The objectives of PMGSY have been substantially fulfilled in
several States. Naturally, these States wish to do more. Hence, it
is proposed to carve out PMGSY-II and allocate a portion of the
funds to the new programme that will benefit States such as Andhra
Pradesh, Haryana, Karnataka, Maharashtra, Punjab and Rajasthan.
Details of PMGSY-II will be announced by the Minister of Rural
Development in due course.
40. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM)
is being continued in the 12th Plan. The 14,000 buses sanctioned
during 2009 to 2012 have made a big contribution to urban
transport. I propose to provide Rs 14,873 crore for JNNURM, as
against the RE of Rs 7,383 crore in the current year. Out of this,
a significant portion will be used to support the purchase of upto
10,000 buses, especially by the hill States.
41. Thanks to our hard working farmers, agriculture continues to
perform very well. The average annual growth rate of agriculture
and allied sector during the 11th Plan was 3.6 percent as against
2.5 percent and 2.4 percent, respectively, in the 9th and 10th
Plans. In 2012-13, total foodgrain production will be over 250
million tonnes. Minimum support price of every agricultural
produce under the procurement programme has been increased
significantly under the UPA Government. Farmers have responded to
the price signals and produced more. Agricultural exports from
April to December, 2012 have crossed Rs 138,403 crore.
42. I propose to allocate Rs 27,049 crore to the Ministry of
Agriculture, an increase of 22 percent over the RE of the current
year. Of this, agricultural research will be provided Rs 3,415
43. Agricultural credit is the driver of agricultural production.
We will exceed the target of Rs 575,000 crore fixed for 2012-13.
For 2013-14, I propose to increase the target to Rs 700,000 crore.
44. The interest subvention scheme for short-term crop loans will
be continued and a farmer who repays the loan on time will be able
to get credit at 4 percent per annum. So far, the scheme has been
applied to loans extended by public sector banks, RRBs and
cooperative banks. I propose to extend the scheme to crop loans
borrowed from private sector scheduled commercial banks in respect
of loans given within the service area of the branch concerned.
45. Bringing the green revolution to eastern India has been a
remarkable success. Assam, Bihar, Chhattisgarh and West Bengal
have increased their contribution to rice production. I propose to
continue to support the eastern Indian States with an allocation
of Rs 1000 crore in 2013-14.
46. The original Green Revolution States face the problem of
stagnating yields and over-exploitation of water resources. The
answer lies in crop diversification. I propose to allocate Rs 500
crore to start a programme of crop diversification that would
promote technological innovation and encourage farmers to choose
47. The Rashtriya Krishi Vikas Yojana is intended to mobilise
higher investment in agriculture and the National Food Security
Mission is intended to bridge yield gaps. I propose to provide Rs
9,954 crore and Rs 2,250 crore, respectively, for these two
48. Small and marginal farmers are vulnerable everywhere, and
especially so in drought prone and ecologically-stressed regions.
Watershed management is crucial to improve productivity of land
and water use. I propose to increase the allocation for the
integrated watershed programme from Rs 3,050 crore in 2012-13 (BE)
to Rs 5,387 crore.
49. Eminent agricultural scientists have suggested that we start a
pilot programme on Nutri-Farms for introducing new crop varieties
that are rich in micro-nutrients such as iron-rich bajra,
protein-rich maize and zinc-rich wheat. I propose to provide a sum
of upto Rs 200 crore to start the pilots. Ministry of Agriculture
will formulate a scheme and I hope that agri businesses and
farmers will come together to start a sufficient number of pilots
in the districts most affected by malnutrition.
50. The National Institute of Biotic Stress Management for
addressing plant protection issues will be established at Raipur,
Chhattisgarh. The Indian Institute of Agricultural Bio-technology
will be established at Ranchi, Jharkhand and will serve as a
centre of excellence in agricultural bio-technology.
51. A pilot scheme to replant and rejuvenate coconut gardens that
was implemented in some districts of Kerala and the Andaman &
Nicobar Islands will be extended to the entire State of Kerala,
and I propose to provide an additional sum of Rs 75 crore in
Farmer Producer Organizations
52. Farmer Producer Organizations (FPO), including Farmer Producer
Companies (FPC), have emerged as aggregators of farm produce and
link farmers directly to markets. To signal our support to them, I
intend to provide matching equity grants to registered FPOs upto a
maximum of Rs 10 lakh per FPO to enable them to leverage working
capital from financial institutions. I propose to provide Rs 50
crore for this purpose. Besides, a Credit Guarantee Fund will also
be created in the Small Farmers' Agri Business Corporation with an
initial corpus of Rs 100 crore. I urge State Governments to
support such FPOs through necessary amendments to the APMC Act and
in other ways.
National Livestock Mission
53. The National Livestock Mission will be launched in 2013-14 to
attract investment and to enhance productivity taking into account
local agro-climatic conditions. I propose to provide Rs 307 crore
for the Mission. There will be a sub Mission for increasing the
availability of feed and fodder.
54. Food security is as much a basic human right as the right to
education or the right to health care. The National Food Security
Bill is a promise of the UPA Government. I sincerely hope that
Parliament will pass the Bill as early as possible. Hon'ble
Members will be happy to know that I have set apart Rs 10,000
crore, over and above the normal provision for food subsidy,
towards the incremental cost that is likely under the Act.
IV. INVESTMENT, INFRASTRUCTURE AND INDUSTRY
55. The growth rate of an economy is correlated with the
investment rate. The key to restart the growth engine is to
attract more investment, both from domestic investors and foreign
investors. Investment is an act of faith. We will improve
communication of our policies to remove any apprehension or
distrust in the minds of investors, including fears about undue
regulatory burden or application of tax laws. 'Doing business in
India' must be seen as easy, friendly and mutually beneficial.
56. While every sector can absorb new investment, it is the
infrastructure sector that needs large volumes of investment. The
12th Plan projects an investment of USD 1 trillion or Rs 55,00,000
crore in infrastructure. The Plan envisages that the private
sector will share 47 percent of the investment. Besides, we need
new and innovative instruments to mobilise funds for this order of
investment. Government has taken or will take the following
measures to increase investment in infrastructure:
- Infrastructure Debt Funds (IDF) will be encouraged. These funds
will raise resources and, through take-out finance, credit
enhancement and other innovative means, provide long-term low-cost
debt for infrastructure projects. I am happy to report that four
IDFs have been registered with SEBI so far and two of them were
launched in the month of February, 2013.
- India Infrastructure Finance Corporation Ltd (IIFCL), in
partnership with the Asian Development Bank, will offer credit
enhancement to infrastructure companies that wish to access the
bond market to tap long term funds.
- In the last two years, a number of institutions were allowed to
issue tax free bonds. They raised Rs 30,000 crore in 2011-12 and
are expected to raise about Rs 25,000 crore in 2012-13. I propose
to allow some institutions to issue tax free bonds in 2013-14,
strictly based on need and capacity to raise money in the market,
upto a total sum of Rs 50,000 crore.
- Multilateral Development Banks are keen to assist in efforts to
promote regional connectivity. Combining the 'Look East' policy
and the interests of the North Eastern States, I propose to seek
the assistance of the World Bank and the Asian Development Bank to
build roads in the North Eastern States and connect them to
- NABARD operates the Rural Infrastructure Development Fund (RIDF).
RIDF has successfully utilised 18 tranches so far. I propose to
raise the corpus of RIDF-XIX in 2013-14 to Rs 20,000 crore.
- Pursuant to the announcement made last year, a sum of Rs 5000
crore will be made available to NABARD to finance construction of
warehouses, godowns, silos and cold storage units designed to
store agricultural produce, both in the public and the private
sectors. This window will also finance, through the State
Governments, construction of godowns by panchayats to enable
farmers to store their produce.
57. The road construction sector has reached a certain level of
maturity. But it faces challenges not envisaged earlier, including
financial stress, enhanced construction risk and contract
management issues, that are best addressed by an independent
authority. Hence, Government has decided to constitute a
regulatory authority for the road sector. Bottlenecks stalling
road projects have been addressed and 3,000 kms of road projects
in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar
Pradesh will be awarded in the first six months of 2013-14.
Cabinet Committee Investment
58. Revival of investment in the industrial sector, especially
manufacturing, is a key challenge. Many projects are stalled
because they are unable to clear regulatory hurdles. The Cabinet
Committee on Investment (CCI) has been set up to monitor
investment proposals as well as projects under implementation,
including stalled projects, and guide decision-making in order to
remove bottlenecks and quicken the pace of implementation. Two
meetings of the CCI have been held already and decisions were
taken in respect of a number of oil and gas, power, and coal
projects. CCI will take up some more projects shortly.
59. To attract new investment and to quicken the implementation of
projects, I propose to introduce an investment allowance for new
high value investments. A company investing Rs 100 crore or more
in plant and machinery during the period 1.4.2013 to 31.3.2015
will be entitled to deduct an investment allowance of 15 percent
of the investment. This will be in addition to the current rates
of depreciation. There will be enormous spill-over benefits to
small and medium enterprises.
60. The National Electronics Policy 2012 is intended to promote
manufacture of electronic goods in India. We recognise the pivotal
role of semiconductor wafer fabs in the eco-system of manufacture
of electronics. I propose to provide appropriate incentives to
semiconductor wafer fab manufacturing facilities, including zero
customs duty for plant and machinery.
61. Increasing savings and their optimal allocation for productive
uses lead to higher economic growth. After touching a high of 36.8
percent in 2007-08, gross domestic saving fell by 6 percentage
points in 2011-12. The private sector, comprising households and
corporates, remains the main contributor to saving. The household
sector must be incentivised to save in financial instruments
rather than buy gold. Hence, I propose the following measures:
- Firstly, the Rajiv Gandhi Equity Savings Scheme will be
liberalised to enable the first time investor to invest in mutual
funds as well as listed shares and she can do so, not in one year
alone, but in three successive years. The income limit will be
raised from Rs 10,00,000 to Rs 12,00,000;
- Secondly, a person taking a loan for his first home from a bank
or a housing finance corporation upto Rs 25,00,000 during the
period 1.4.2013 to 31.3.2014 will be entitled to an additional
deduction of interest of upto Rs 100,000. This will promote home
ownership and give a fillip to a number of industries like steel,
cement, brick, wood, glass etc. besides jobs to thousands of
- Thirdly, in consultation with RBI, I propose to introduce
instruments that will protect savings from inflation, especially
the savings of the poor and middle classes. These could be
Inflation Indexed Bonds or Inflation Indexed National Security
Certificates. The structure and tenor of the instruments will be
announced in due course.
62. The Delhi Mumbai Industrial Corridor (DMIC) project has made
rapid progress. Plans for seven new cities have been finalised and
work on two new smart industrial cities at Dholera, Gujarat and
Shendra Bidkin, Maharashtra will start during 2013-14. We
acknowledge the support of the Government of Japan. In order to
dispel any doubt about funding, I wish to make it clear that we
shall provide, if required, additional funds during 2013-14 within
the share of the Government of India in the overall outlay for the
63. The Department of Industrial Policy and Promotion (DIPP) and
the Japan International Cooperation Agency (JICA) are currently
preparing a comprehensive plan for the Chennai Bengaluru
Industrial Corridor. The corridor will be developed in
collaboration with the Governments of Tamil Nadu, Andhra Pradesh
64. The next corridor will be the Bengaluru Mumbai Industrial
Corridor on which preparatory work has started.
Leh-Kargil Transmission Line
65. To improve power supply in the Leh-Kargil region and connect
the Ladakh region to the northern grid, the Government will
construct a transmission system from Srinagar to Leh at a cost of
Rs 1,840 crore. I propose to provide Rs 226 crore in 2013-14 for
66. Two new major ports will be established in Sagar, West Bengal
and in Andhra Pradesh to add 100 million tonnes of capacity. In
addition, a new outer harbour will be developed in the VOC port at
Thoothukkudi, Tamil Nadu through PPP at an estimated cost of Rs
7,500 crore. When completed, this will add 42 million tonnes of
67. Five inland waterways have been declared as national
waterways. I am happy to announce that the Minister of Water
Resources will move a Bill in Parliament to declare the Lakhipur -
Bhanga stretch of river Barak in Assam as the sixth national
waterway. Preparatory work is underway to build a grid connecting
waterways, roads and ports. The 12th Plan has an adequate outlay
for capital works, including dredging, on the national waterways.
The objective is to choose barge operators, through competitive
bidding, to transport bulk cargo on the national waterways. The
first transport contract has been awarded in West Bengal from
Haldia to Farakka.
Oil and Gas
68. The oil and gas exploration policy will be reviewed to move
from profit sharing to revenue sharing contracts. A policy to
encourage exploration and production of shale gas will be
announced. The natural gas pricing policy will be reviewed and
uncertainties regarding pricing will be removed. NELP blocks that
were awarded but are stalled will be cleared. The 5 MMTPA LNG
terminal in Dabhol, Maharashtra will be fully operational in
69. Despite abundant coal reserves, we continue to import large
volumes of coal. Coal imports during the period April-December,
2012 have crossed 100 million tonnes. It is estimated that imports
will rise to 185 million tonnes in 2016-17. If the coal
requirements of the existing power plants and the power plants
that will come into operation by 31.3.2015 are taken into account,
there is no alternative except to import coal and adopt a policy
of blending and pooled pricing. In the medium to long term, we
must reduce our dependence on imported coal. One of the ways
forward is to devise a PPP policy framework, with Coal India
Limited as one of the partners, in order to increase the
production of coal for supply to power producers and other
consumers. These matters are under active consideration and the
Minister of Coal will announce Government's policies in this
behalf in due course.
70. Hon'ble Members are aware that the Government has approved a
scheme for the financial restructuring of DISCOMS to restore the
health of the power sector. I would urge State Governments to
prepare the financial restructuring plans quickly, sign the MOU,
and take advantage of the scheme.
Micro, Small and Medium Enterprises
71. Micro, small and medium enterprises (MSME) have a large share
of jobs, production and exports. Too many of them do not grow
because of the fear of losing the benefits associated with staying
small or medium. To encourage them to grow, I propose that the
benefits or preferences enjoyed by them will stay with them for
upto three years after they grow out of the category in which they
obtained the benefit. To begin with, I propose that the non-tax
benefits may be made available to a MSME unit for three years
after it graduates to a higher category.
72. To provide greater support to MSMEs, I propose to enhance the
refinancing capability of SIDBI from the current level of Rs 5,000
crore to Rs 10,000 crore per year.
73. SIDBI set up the India Microfinance Equity Fund in 2011-12
with budgetary support of Rs 100 crore to provide equity and
quasi-equity to Micro Finance Institutions (MFI). An amount of Rs
104 crore has been committed to 37 MFIs. I have allocated Rs 100
crore to the IME Fund in the budget and I now propose to provide
another sum of Rs 100 crore to the Fund.
74. The Factoring Act 2011 has been passed by Parliament. I
propose to provide a corpus of Rs 500 crore to SIDBI to set up a
Credit Guarantee Fund for factoring.
75. Tool Rooms and Technology Development Centres set up by the
Ministry of Micro, Small and Medium Enterprises have done well in
extending technology and design support to small businesses. I
propose to provide, with World Bank assistance, a sum of Rs 2,200
crore during the 12th Plan period to set up 15 additional Centres.
76. Incubators play an important role in mentoring new businesses
which start as a small or medium business. The new Companies Bill
obliges companies to spend 2 percent of average net profits under
Corporate Social Responsibility (CSR). I am glad to announce that
the Ministry of Corporate Affairs will notify that funds provided
to technology incubators located within academic institutions and
approved by the Ministry of Science and Technology or Ministry of
MSME will qualify as CSR expenditure.
77. I propose to continue the Technology Upgradation Fund Scheme (TUFS)
for the textile sector in the 12th Plan with an investment target
of Rs 151,000 crore. The major focus would be on modernisation of
the powerloom sector. I propose to provide Rs 2,400 crore in
2013-14 for the purpose.
78. Textile parks have been set up under Scheme for Integrated
Textile Parks (SITP). It is proposed to set up Apparel Parks
within the SITPs to house apparel manufacturing units. To
incentivise such Apparel Parks, I propose to allocate Rs 50 crore
to the Ministry of Textiles to provide an additional grant of upto
Rs 10 crore to each Park.
79. A new scheme with an outlay of Rs 500 crore called the
Integrated Processing Development Scheme will be implemented in
the 12th Plan to address the environmental concerns of the textile
industry, including improving the effluent treatment
infrastructure. I propose to provide Rs 50 crore in 2013-14 for
80. The handloom sector is in distress. A very large proportion of
handloom weavers are women and belong mainly to the backward
classes. I propose to accept their demand for working capital and
term loans at a concessional interest of 6 percent. 150,000
individual weavers and 1,800 primary cooperative societies will
benefit in 2013-14. I propose to allocate an additional sum of Rs
96 crore in 2013-14 to the Ministry of Textiles for interest
81. India has a rich heritage of traditional industries. Khadi,
village industries and coir were taken up for development during
the 11th Plan under the Scheme of Fund for Regeneration of
Traditional Industries (SFURTI). The 12th Plan has provided an
outlay of Rs 850 crore. I propose to leverage assistance from
Multilateral Development Banks to extend SFURTI to 800 clusters
during the 12th Plan. 400,000 artisans are expected to be
82. I look forward to the changes that will be made to the Foreign
Trade Policy next month and I assure my support to measures that
will be taken to boost exports of goods and services.
V. FINANCIAL SECTOR
83. The financial sector is at the heart of the economy.
84. Hon'ble Members are aware that Government constituted the
Financial Sector Legislative Reforms Commission (FSLRC) in 2011. I
am informed that the report will be presented next month. It is
our intention to examine the recommendations and act quickly and
decisively so that our financial sector stands on sound legal
foundations and remains well-regulated, efficient and
internationally competitive. I propose to constitute a Standing
Council of Experts in the Ministry of Finance to analyse the
international competitiveness of the Indian financial sector,
periodically examine the transaction costs of doing business in
the Indian market, and provide inputs to Government for necessary
85. Our public sector banks are well regulated, they must also be
adequately capitalised. Before the end of March, 2013, we shall
provide Rs 12,517 crore to infuse additional capital into 13
public sector banks. In 2013-14, I propose to provide a further
amount of Rs 14,000 crore for capital infusion. We shall ensure
that public sector banks always meet the Basel III regulations as
they come into force in a phased manner.
86. Financial inclusion has made rapid strides. All scheduled
commercial banks and all RRBs are on core banking solution (CBS)
and on the electronic payment systems (NEFT and RTGS). We are
working with RBI and NABARD to bring all other banks, including
some cooperative banks, on CBS and e-payment systems by
31.12.2013. Public sector banks have assured me that all their
branches will have an ATM in place by 31.3.2014.
87. Women are at the head of many banks today, including two
public sector banks, but there is no bank that exclusively serves
women. Can we have a bank that lends mostly to women and women-run
businesses, that supports women SHGs and women's livelihood, that
employs predominantly women, and that addresses gender related
aspects of empowerment and financial inclusion? I think we can. I
therefore propose to set up India's first Women's Bank as a public
sector bank and I shall provide Rs 1,000 crore as initial capital.
I hope to obtain the necessary approvals and the banking licence
by October, 2013, and I invite all Hon'ble Members to the
inauguration of the bank shortly thereafter.
88. The Rural Housing Fund set up through the National Housing
Bank is used to refinance lending institutions, including RRBs,
that extend loans for rural housing. So far, 400,000 rural
families have taken loans. In the last Budget, we provided Rs
4,000 crore to the Fund. In consultation with RBI, I propose to
provide Rs 6,000 crore to the Rural Housing Fund in 2013-14.
89. Similarly, it is proposed to start a fund for urban housing to
mitigate the huge shortage of houses in urban areas. I propose to
ask National Housing Bank to set up the Urban Housing Fund and, in
consultation with RBI, I propose to provide Rs 2,000 crore to the
Fund in 2013-14.
90. A multi-pronged approach will be followed to increase the
penetration of insurance, both life and general, in the country. I
have a number of proposals that have been finalised in
consultation with the regulator, IRDA.
- Insurance companies will be empowered to open branches in Tier
II cities and below without prior approval of IRDA.
- All towns of India with a population of 10,000 or more will have
an office of LIC and an office of at least one public sector
general insurance company. I propose to achieve this goal by
- KYC of banks will be sufficient to acquire insurance policies.
- Banks will be permitted to act as insurance brokers so that the
entire network of bank branches will be utilised to increase
- Banking correspondents will be allowed to sell micro-insurance
- Group insurance products will now be offered to homogenous
groups such as SHGs, domestic workers associations, anganwadi
workers, teachers in schools, nurses in hospitals etc.
- There are about 10,00,000 motor third party claims that are
pending before Tribunals/Courts. Public sector general insurance
companies will organise adalats to settle the claims and give
relief to the affected persons/families.
91. The Insurance Laws (Amendment) Bill and the PFRDA Bill are
before this House. I sincerely hope that Government and the
Opposition can arrive at a consensus and pass the two Bills in
92. The Rashtriya Swasthiya Bima Yojana covers 34 million families
below the poverty line. It will now be extended to other
categories such as rickshaw, auto-rickshaw and taxi drivers,
sanitation workers, rag pickers and mine workers.
93. A comprehensive and integrated social security package for the
unorganised sector is a measure that will benefit the poorest and
most vulnerable sections of society. The package should include
life-cum-disability cover, health cover, maternity assistance and
pension benefits. The present schemes such as AABY, JSBY, RSBY,
JSY and IGMSY are run by different ministries and departments. I
propose to facilitate convergence among the various stakeholder
ministries/departments so that we can evolve a comprehensive
social security package.
94. I believe that India's capital market is among the best
regulated markets. This year is SEBI's silver jubilee year and I
offer the regulator our congratulations. A proposal to amend the
SEBI Act to strengthen the regulator is under consideration.
95. I have a number of proposals relating to the capital market
that have been finalised in consultation with SEBI:
- There are many categories of foreign portfolio investors such as
FIIs, sub-accounts, QFIs etc. and there are also different avenues
and procedures for them. Designated depository participants,
authorised by SEBI, will now be free to register different classes
of portfolio investors, subject to compliance with KYC guidelines.
- SEBI will simplify the procedures and prescribe uniform
registration and other norms for entry of foreign portfolio
investors. SEBI will converge the different KYC norms and adopt a
risk-based approach to KYC to make it easier for foreign investors
such as central banks, sovereign wealth funds, university funds,
pension funds etc. to invest in India.
- In order to remove the ambiguity that prevails on what is
Foreign Direct Investment (FDI) and what is Foreign Institutional
Investment (FII), I propose to follow the international practice
and lay down a broad principle that, where an investor has a stake
of 10 percent or less in a company, it will be treated as FII and,
where an investor has a stake of more than 10 percent, it will be
treated as FDI. A committee will be constituted to examine the
application of the principle and to work out the details
- FIIs will be allowed to participate in the exchange traded
currency derivative segment to the extent of their Indian rupee
exposure in India.
- FIIs will also be permitted to use their investment in corporate
bonds and Government securities as collateral to meet their margin
- Angel investors bring both experience and capital to new
ventures. SEBI will prescribe requirements for angel investor
pools by which they can be recognised as Category I AIF venture
- Small and medium enterprises, including start-up companies, will
be permitted to list on the SME exchange without being required to
make an initial public offer (IPO), but the issue will be
restricted to informed investors. This will be in addition to the
existing SME platform in which listing can be done through an IPO
and with wider investor participation.
- With the object of developing the debt market, stock exchanges
will be allowed to introduce a dedicated debt segment on the
exchange. Banks and primary dealers will be the proprietary
trading members. In order to create a complete market, insurance
companies, provident funds and pension funds will be permitted to
trade directly in the debt segment with the approval of the
- Mutual fund distributors will be allowed to become members in
the Mutual Fund segment of stock exchanges so that they can
leverage the stock exchange network to improve their reach and
- The list of eligible securities in which Pension Funds and
Provident Funds may invest will be enlarged to include exchange
traded funds, debt mutual funds and asset backed securities.
96. India tosses out several thousand tonnes of garbage each day.
We will evolve a scheme to encourage cities and municipalities to
take up waste-to-energy projects in PPP mode which would be
neutral to different technologies. I propose to support
municipalities that will implement waste-to-energy projects
through different instruments such as viability gap funding,
repayable grant and low cost capital.
97. Clean and Green energy is a priority of the Government.
However, despite cost advantages in labour, land and construction,
the consumer pays a high price for renewable energy. One of the
reasons is high cost of finance. In order to provide low cost
finance, Government will provide low interest bearing funds from
the National Clean Energy Fund (NCEF) to IREDA to on-lend to
viable renewable energy projects. The scheme will have a life span
of five years.
98. The non-conventional wind energy sector deserves incentives.
Hence, I propose to reintroduce 'generation-based incentive' for
wind energy projects and provide Rs 800 crore to the Ministry of
Non Renewable Energy for the purpose.
VII. OTHER PROPOSALS Backward Regions Grant Fund
99. The Backward Regions Grant Fund (BRGF) is a vital source of
gap funding. I propose to allocate Rs 11,500 crore in 2013-14 as
well as another sum of Rs 1,000 crore for LWE affected districts.
BRGF will include a State component for Bihar, the Bundelkand
region, West Bengal, the KBK districts of Odisha and the 82
districts under the Integrated Action Plan. The present criteria
for determining backwardness are based on terrain, density of
population and length of international borders. It may be more
relevant to use a measure like the distance of the State from the
national average under criteria such as per capita income,
literacy and other human development indicators. I propose to
evolve new criteria and reflect them in future planning and
devolution of funds.
100. Hon'ble Members will recall that in 2008-09 I had proposed
the establishment of the National Skill Development Corporation.
The Corporation has since been set up and has done good work, but
there is a long way to go. We have set an ambitious target of
skilling 50 million people in the 12th Plan period, including 9
million in 2013-14. We have to pull out all stops to achieve this
objective. Funds will be released by the National Rural Livelihood
Mission and the National Urban Livelihood Mission to be spent on
skill development activities. 5 percent of the Border Area
Development Programme Fund, 10 percent of the Special Central
Assistance to the Scheduled Caste sub plan and the Tribal sub
plan, and some other funds will also be used for skill
101. I propose to increase the allocation for Defence to Rs
203,672 crore. This will include Rs 86,741 crore for capital
expenditure. The Minister of Defence has been most understanding,
and I assure him and the House that constraints will not come in
the way of providing any additional requirement for the security
of the nation.
Science & Technology
102. Despite our constraints, we must find resources for science
and technology and for Space, Atomic Energy etc. I propose to
allocate Rs 6,275 crore to the Ministry of Science & Technology;
Rs 5,615 crore to the Department of Space; and Rs 5,880 crore to
the Department of Atomic Energy. Hon'ble Members will be happy to
know that these amounts are substantial enhancements.
103. While we extol the virtues of science and technology (S&T), I
think we do not pay enough attention to science and technology for
the common man. With the help of the Ministry of Science and
Technology and the Principal Scientific Adviser to the Government,
I have identified a few amazing S&T innovations. I propose to set
apart Rs 200 crore to fund organisations that will scale up and
make these products available to the people. I propose to ask the
National Innovation Council to formulate a scheme for the
management and application of the fund.
Institutions of Excellence
104. Continuing the tradition of supporting institutions of
excellence, I propose to make a grant of Rs 100 crore each to:
- Aligarh Muslim University, Aligarh campus
- Banaras Hindu University, Varanasi
- Tata Institute of Social Sciences, Guwahati campus
- Indian National Trust for Art and Cultural Heritage (INTACH)
105. Sports of all kind deserve our support. We have many
sportsmen and sportswomen but few coaches. Hence, I propose to set
up the National Institute of Sports Coaching at Patiala at a cost
of Rs 250 crore over a period of three years.
106. Government proposes to expand private FM radio services to
294 more cities. About 839 new FM radio channels will be auctioned
in 2013-14 and, after the auction, all cities having a population
of more than 100,000 will be covered by private FM radio services.
107. The Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA) was
started in the current year with a modest allocation of Rs 50
crore. Keeping in view the importance of building capacity in
panchayati raj institutions, I had allocated Rs 455 crore to the
Ministry of Panchayati Raj in 2013-14. I propose to provide an
additional Rs 200 crore .
108. Government has initiated an ambitious IT driven project to
modernise the postal network at a cost of Rs 4,909 crore. Post
offices will become part of the core banking solution and offer
real time banking services. I propose to provide Rs 532 crore for
the project in 2013-14.
109. To mark the centenary of the Ghadar movement, the Government
will fund the conversion of the Ghadar Memorial in San Francisco
into a museum and library.
110. Government is concerned about the proliferation of Centrally
Sponsored Schemes (CSS) and Additional Central Assistance (ACA)
schemes. They were 173 in number at the end of the 11th Plan. I am
glad to announce that the schemes will be restructured into 70
schemes. Each scheme will be reviewed once in two years. Central
funds for the schemes will be given to the States as part of
central plan assistance. Hon'ble Members will be glad to know
that, in 2013-14, I expect to transfer resources to the tune of Rs
5,87,082 crore to the States and UTs under share of taxes,
non-plan grants and loans, and central assistance.
I make three promises
111. Madam Speaker, before I close this part of my speech, I wish
to draw a picture of three faces that represent the vast majority
of the people of India. The first is the face of the woman. She is
the girl child, the young student, the sportswoman, the homemaker,
the working woman, and the mother. The second is the face of the
youth. He is impatient, she is ambitious, and both represent the
aspirations of a new generation. The third is the face of the poor
who look to the government for a little help, a scholarship or an
allowance or a subsidy or a pension. To each of them, on behalf of
the Government, the Prime Minister and the Chairperson of the UPA,
I make a promise.
112. To the women of India: We have a collective responsibility to
ensure the dignity and safety of women. Recent incidents have cast
a long, dark shadow on our liberal and progressive credentials. As
more women enter public spaces - for education or work or access
to services or leisure - there are more reports of violence
against them. We stand in solidarity with our girl children and
women. And we pledge to do everything possible to empower them and
to keep them safe and secure. A number of initiatives are under
way and many more will be taken by Government as well as
non-government organisations. These deserve our support. As an
earnest of our commitment to these objectives, I propose to set up
a fund - let us call it the Nirbhaya Fund - and Government will
contribute Rs 1,000 crore. Ministry of Women and Child Development
and other ministries concerned will be requested to work out the
details of the structure, scope and application of the fund.
113. To the youth of India: A large number of youth must be
motivated to voluntarily join skill development programmes. I
propose to ask the National Skill Development Corporation to set
the curriculum and standards for training in different skills. Any
institution or body may offer training courses. At the end of the
training, the candidate will be required to take a test conducted
by authorised certification bodies. Upon passing the test, the
candidate will be given a certificate as well as a monetary reward
of an average of Rs 10,000 per candidate. Skill- trained youth
will give an enormous boost to employability and productivity. On
the assumption that 10,00,000 youth can be motivated, I propose to
set apart Rs 1,000 crore for this ambitious scheme. I hope that
this will be the trigger to extend skill development to all the
youth of the country.
114. To the poor of India: The Direct Benefit Transfer scheme has
captured the imagination of the people, especially the poor. The
Government is the government of the people. The money is the money
belonging to the people. When we say "Aapka paisa aapke haath",
why should anyone oppose it? We have made a modest and cautious
beginning on the 1st of January, 2013. Nearly 11 lakh
beneficiaries have received the benefit directly into their bank
accounts. All around us, we see the smiles on the faces of the
dalit girls and the tribal boys who have received their
scholarships. We see the happiness on the faces of the pregnant
women who are assured that the Government cares for the mother and
the child before and after child birth. We are redoubling our
efforts to ensure that the digitized beneficiary lists are
available; that a bank account is opened for each beneficiary; and
that the bank account is seeded with Aadhaar in due course. I
assure the House and the people of India that the DBT scheme will
be rolled out throughout the country during the term of the UPA
115. I shall now turn to the Budget Estimates for 2013-14.
116. The estimate of Plan Expenditure is placed at Rs 5,55,322
crore. As a proportion of total expenditure, it will be 33.3
117. Non Plan Expenditure is estimated at Rs 11,09,975 crore.
118. When we accepted the main recommendations of the Kelkar
report, I had drawn some red lines and promised that I would not
cross those lines. I am glad to report that I have kept my
promise. The fiscal deficit for the current year has been
contained at 5.2 percent and the fiscal deficit for the year
2013-14 is estimated at 4.8 percent. The revenue deficit for the
current year will be 3.9 percent and the revenue deficit for the
year 2013-14 is estimated at 3.3 percent. We must redeem our
promise by 2016-17 and bring down the fiscal deficit to 3 percent,
the revenue deficit to 1.5 percent and the effective revenue
deficit to zero.
VIII. TAX PROPOSALS
119. Madam Speaker, I shall now present my tax proposals.
120. When I took over in August, 2012, I made a statement that
"clarity in tax laws, a stable tax regime, a non-adversarial tax
administration, a fair mechanism for dispute resolution, and an
independent judiciary will provide great assurance". That
statement is the underlying theme of my tax proposals, both on the
direct taxes side and on the indirect taxes side.
121. An emerging economy must have a tax system that reflects best
global practices. I propose to set up a Tax Administration Reform
Commission to review the application of tax policies and tax laws
and submit periodic reports that can be implemented to strengthen
the capacity of our tax system.
122. In 2011-12, the tax GDP ratio was 5.5 percent for direct
taxes and 4.4 percent for indirect taxes. These ratios are one of
the lowest for any large developing country and will not garner
adequate resources for inclusive and sustainable development. I
may recall that in 2007-08, the tax GDP ratio touched a peak of
11.9 percent. In the short term, we must reclaim that peak.