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Rediff.com  » Business » Chidambaram announces his 4th Budget

Chidambaram announces his 4th Budget

Last updated on: February 28, 2005 12:29 IST

Finance Minister P Chidambaram on Monday announced in the Budget for 2005-06 that the Planning Commission has drawn up Tsunami relief programme costing Rs 10,260 crore (Rs 102.6 billion).

So far, Rs 3644 crore (Rs 36.44 billion) have been provided for Tsunami relief.

Growth rate in current year is estimated to be 6.9 per cent.

Despite high economic growth, there were several disturbing trends during 2004 when the United Progressive Allinace government came to power, Chidambaram said.

Inflation has been reined at 5.01 per cent as of February 12, one per cent less than what it was in the corresponding period last year, Chidambaram said.

Inflation stood at 8.5 per cent on August 28 last year.

Allocation for rural development would be Rs 18,334 crore (Rs 183.34 billion).

In the space of nine months, "we have risen to challenges as outlined by the National Common Minimum Programme", Chidambaram said.

As against the target of Rs 105, 000 crore of agricultural credit this fiscal, as much as Rs 1,08500 crore (Rs 1085 billion) was disbursed.

As against the target of 185,000 self help groups, the government has already achieved 226,000 such groups as part of efforts to tackle poverty and unemployment.

National Rural Health Scheme to be launched in the new fiscal.

The allocation for the health sector has been increased to Rs 10,280 crore (Rs 102.8 billion) for 2005-06 as against Rs 8420 crore (Rs 84.2 billion) in the current year.

The Antodya Anna Yojana Scheme coverage is being increased from two crores families to 2.5 crore families below poverty line.

Gross budgetary support for plan during 2005-06 has been fixed at Rs 1,72,500 crore (Rs 1725 billion), an increase of 16.9 per cent over the current year's figure.

In the current year, it was originally fixed at Rs 1,45,590 crore (Rs 1455.9 billion) to which an additional Rs 2,000 crore (Rs 2 billion) was done.

Support for Central plan in the new financial year will be Rs 1,10,385 crore (Rs 1103.85 billion) which, Chidamabram said, was very substantial and represent an unprecedented increase of over 25 per cent.

In the current year, the budget estimate was Rs 87,896 crore (Rs 878.96 billion). Two thousand fellowships will be awarded under Rajiv Gandhi National Scholarship scheme for Scheduled Castes and Scheduled Tribes for pursuing courses like M. Phil and Ph. D.

Outlining efforts of government to push up employment, Chidambaram said food processing is generating 250,000 additional jobs, textiles 1.2 crore (12 million) jobs, IT 70 lakh (7 million) jobs by 2009 and construction industry lakhs of additional jobs in the face of industrial boom in the country.

He announced the national rural health mission will be launched next fiscal.

Six AIIMS-type medical institutions will start in different parts of the country in the near future, Chidambaram said.

Fertiliser subsidy has been pegged at Rs 16,254 crore (Rs 162.54 billion) while allocation for rural development is put at Rs 18,334 crore (Rs 183.34 billion) for 2005-06.

For Sarvashikha Abhiyan, the allocation has been raised to Rs 7156 crore (Rs 71.56 billion).

Special plan assistance to Jammu and Kashmir has been announced. State Plan hiked from Rs 3,008 crore (RS 30.08 billion) to Rs 4,200 crore (Rs 42 billion). Baglihar Hydel Project which was given Rs 300 crore (Rs 3 billion) last year would be given adequate funds next year.

For midday meal scheme covering 11 crore children, the Budget estimate for the new year is increased to Rs 3,010 crore (Rs 30.10 billion) from Rs 1,675 crore (Rs 16.75 billion) in Budget estimate for the current year.

For Rajiv Gandhi drinking water mission, the allocation has been increased to Rs 4750 crore (Rs 47.5 billion) in 2005-06 from Rs 3300 crore (Rs 33 billion) in the current year.

Observing that only 30 per cent of rural people enjoyed safe sanitation, Chidambaram said the scheme to provide proper sanitation facilities to all districts would get an allocation of Rs 630 crore (Rs 6.3 billion) this year.

Largesse scholarships to be provided for SC/ST students in select top class institutes, details of which would be announced shortly.

There will be greater credit flow for urban poor.

Central assistance for recruitment and posting of Urdu teachers in primary and upper primary schools where majority of students speak that language.

Funds to be provided for minority community's meritorious candidates appearing in competitive exams.

An allocation of Rs 5000 crore (Rs 50 billion) for backward regions grant fund for 2005-06 and this allocation will continue for next four years.

Twelfth Finance Commission has provided Rs 7975 crore (Rs 79.75 billion) for 2005-10 for development of backward regions in Bihar.

Udhampur-Baramulla rail section to be completed on a priority basis.

Rs 450 crore (Rs 4.5 billion) provided for Highway Development in North East.

Bihar has been identified for special grant for health and education.

For Jammu and Kashmir, the state plan has been fixed at Rs 4200 crore (Rs 42 billion).

The FM also announced 60 lakh additional houses for the poor.

Equity support of Rs 14040 crore and Rs 3554 crore for Central PSUs including Railways.

Launching Bharat Nirmal Programme to give a new deal to rural India, Chidambaram announced the Budget would lay stress on development of six areas -- irrigation, roads, water supply,  rural electrification, housing and rural connectivity.

The proposal is to provide additional one crore hectare of irrigation, construct 60 lakh houses for poor, connect all villages with 1,000 population in plains and 500 in hilly areas with roads, drinking water to 74,000 remaining habitations and electricity for 1,25,000 remaining villages and telephone connectivity to 66,822 villages.

Agriculture diversification were announced to cover fruits, vegetables, poultry, diary, pulses and oilseeds.

National Horticulture Mission to be launched on April 1.

To improve the plantation sector, government has set up a committee to modify the price stabilisation fund, which has proved to be ineffective.

A massive tea plantation and rejuvenation scheme will be taken up.

Pilot project to improve water bodies to be taken up at a cost of Rs 100 crore.

A plan out of Rs 180 crore (Rs 1.8 billion) fund will be set up for flood control and erosion in Eastern parts of UP, Bihar, West Bengal, Orissa and North-East on account of floods in Bramaputra and Ganga.

An additional Rs 52 crore (Rs 520 million) will be allocated for Farakka Barage.

This is being done on the basis of Task Force report submitted recently.

Rs 400 crore (Rs 4 billion) provided for stepping up micro-irrigation comprising drip and sprinkler irrigation.

So far 1.2 million hectares have been covered by micro irrigation in the country, which is to be stepped up to 3 million hectares by the end of the 10th plan and 14 million hectares by the end of 11th plan.

Rural RRBs and cooperatives will be asked to extend agricultural credit by another 30 per cent in the current year.

The National Agriculture Insurance Scheme will be extended for Kharif and Rabi season of 2005/06.

Task force's recommendations on reforming cooperative banks have been accepted.

The main features of the recommendations are restructuring of the accumulated debt and changes in legal framewoork to enable RBI to enforce prudential norms and strengthen the capital base of these cooperative banks.

RBI asked to open window for qualified NGOs to tap ECB route for micro finance.

Government to provide full support to IRDA for encouraging micro-insurance, which is proposed to be carried out by NGO, Self-Finance Groups and Micro-Finance Institutions.

Knowledge centres would be set up following recommendations of the National Commission for Farmers under the Mission 2007, Chidambaram said.

Recommendations of the Tuteja Committee Report on sugar industry accepted by the government and a financial package for revival of sugar factories with a two-year moratorium having regard to their commercial viability announced.

This will be applicable to sugar factories, which were operational during 2002-03 sugar season.

Chidambaram announced ten per cent capital subsidy for the textile sector.

The allocation for Rs 25,000 crore (Rs 250 billion) technology upgradation fund has been increased by Rs 435 crore (Res 4.35 billion).

Rs 20,000 crore (Rs 200 billion) has already been spent by the textile industry to meet challenges of post quota regime. It is to go up to Rs 30,000 crore (Rs 300 billion) in the near future.

He announced a manufacturing competitiveness programme to improve the small scale and medium sized manufacturing industries.

He also announced Rs 40 crore (Rs 400 million) for modernisation of 20 clusters of handloom manufacturers.

The government sets ambitious merchandise export target of $150 billion by 2009 and would further liberalise trade policy.

Expressing concern over low teledensity in the country, the Finance Minister said Rs 1,700 crore (Rs 17 billion) were granted to the universal service obligation fund last fiscal. An amount of Rs 1,200 crore is being allocated to it this year.

BSNL would provide VPT connections to remaining 66,822 villages in the next two years, with 520,000 VPTs being installed already.

Rs.1400 crore (Rs 14 billion) was provided in 2005-06 for creation of 4000 km of four-lane highways, which would be apart from the Golden Quadrilateral and North-South East-West corridor under National Highway Development programme three.

Special package for north eastern states were approved.

Allocation for Indira Awaas Yojana has been increased from Rs 2200 crore (Rs 22 billion) to Rs 2750 crore (Rs 27.5 billion) to build an additional 15 lakh houses.

For rural electricification a sum of Rs 1100 crore (Rs 11 billion) is being allocated.

A Special Purpose Vehicle to be set up for viable infrastructure projects in roads, ports and airports.

Some of these projects were not taking off because of lack of funds though being viable. The purpose of SPV is to tackle this, Chidambaram said.

A National Urban Renewal Mission launched with an outlay of Rs 5500 crore (Rs 55 billion) in 2005-06 aimed at improving seven mega cities and other cities with over one million population. This would have a grant component of Rs.1650 crore (Rs 16.5 billion).

RBI will prepare a roadmap for banking sector reforms and the government will introduce a comprehensive amendment to the Banking Regulation Act.

The roadmap will aim at improving competition among nationalised banks as India's top bank SBI ranks only 82 in the world in terms of business.

To strengthen the capital market, Chidambaram authorised Securities and Exchange Board of India to set up a national institute for teaching and training people in securities and to permit foreign institutional investors to provide collaterals on trading and derivatives.

He also proposed to amend the definition of security to provide for legal framework for dealing in it

RBI Act of 1934 to be amended to provide flexibility to monetary policies, particularly on SLR and capital adequacy ratio.

The finance minister proposed to constitute high power experts committee in consultation with RBI to make Mumbai a regional financial centre.  

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