>KEY FEATURES OF BUDGET 2010-2011 (SMC)

CHALLENGES
■ To quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the ‘double digit growth barrier’.
■ To harness economic growth to consolidate the recent gains in making development more inclusive.
■ To address the weaknesses in government systems, structures and institutions at different levels of governance.

OVERVIEW OF THE ECONOMY
■ India among the first few countries in the world to implement a broad-based counter-cyclic policy package to respond to the negative fallout of the global slowdown.
■ The Advance Estimates for Gross Domestic Product (GDP) growth for 2009-10 pegged at 7.2 per cent. The final figure expected to be higher when the third and fourth quarter GDP estimates for 2009-10 become available.
■ The growth rate in manufacturing sector in December 2009 was 18.5 per cent - the highest in the past two decades.
■ A major concern during the second half of 2009-10 has been the emergence of double digit food inflation. Government has set in motion steps, in consultation with the State Chief Ministers, which should bring down the inflation in the next few months and ensure that there is better management of food security in the
country.

CONSOLIDATING GROWTH
Fiscal Consolidation
■ With recovery taking root, there is a need to review public spending, mobilise resources and gear them towards building the productivity of the economy.
■ Fiscal policy shaped with reference to the recommendations of the Thirteenth Finance Commission, which has recommended a calibrated exit strategy from the expansionary fiscal stance of last two years.
■ It would be for the first time that the Government would target an explicit reduction in its domestic public debt-GDP ratio.

Tax reforms
■ On the Direct Tax Code (DTC) the wide-ranging discussions with stakeholders have been concluded - Government will be in a position to implement the DTC from April 1, 2011.
■ Centre actively engaged with the Empowered Committee of State Finance Ministers to finalise the structure of Goods and Services Tax (GST) as well as the modalities of its expeditious implementation. Endeavour to introduce GST by April, 2011 People’s ownership of PSUs
■ Ownership has been broad based in Oil India Limited, NHPC, NTPC and Rural Electrification Corporation while the process is on for National Mineral Development Corporation and Satluj Jal Vidyut Nigam. This will raise about Rs 25,000 crore during the current year.
■ Higher amount proposed to be raised during the year 2010-11.

Fertiliser subsidy
■ A Nutrient Based Subsidy policy for the fertiliser sector has been approved by the Government and will become effective from April 1, 2010.
■ This will lead to an increase in agricultural productivity and better returns for the farmers, and overtime reduce the volatility in demand for fertiliser subsidy and contain the subsidy bill.

Petroleum and Diesel pricing policy
■ Expert Group to advise the Government on a viable and sustainable system of pricing of petroleum products has submitted its recommendations.
■ Decision on these recommendations will be taken in due course.

Improving Investment Environment
Foreign Direct Investment
■ Number of steps taken to simplify the FDI regime.
■ Methodology for calculation of indirect foreign investment in Indian companies has been clearly defined.
■ Complete liberalisation of pricing and payment of technology transfer fee and trademark, brand name and royalty payments.

Financial Stability and Development Council
■ An apex level Financial Stability and Development Council to be set up with a view to strengthen and institutionalise the mechanism for maintaining financial stability.

■ This Council would monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, and address interregulatory coordination issues.

To read the full report: BUDGET 2010-2011