Monday, February 28, 2011

Budget to meet challenges of economic growth: PM

New Delhi: Prime Minister Manmohan Singh on Monday said the Budget was aimed at consolidation of fiscal deficit and moderation of taxes and will meet challenges of the economic growth of the country.

On the controversial black money issue and lack of any amnesty scheme in the Budget to bring it back, Singh said there have been such schemes in past that have yielded little success.

"I don`t think they have succeeded in providing permanent cure for black money. We need to have a systems reform in a holistic manner to deal with this menace," he said.

Congratulating Pranab Mukherjee for doing a "commendable" job, Singh said, "You cannot please all the people. The Finance Minister has done as good a job as possible."

He was responding to a query on why there was no increase in the income tax exemption limit for women.

"This is the Budget which meets all the challenges of our economy and polity face in the next fiscal year... This is a Budget that matches the challenges that our economy faces ---sustained growth, inclusive growth, equitable growth and thus, a determined effort to curb inflationary expectations," Singh said in an interview.

Singh also noted that "quite a lot" has been to encourage foreign direct investment. The Prime Minister said that there was a need to maintain a high growth rate for which adequate provisions have been made in the areas of infrastructure, social and agricultural sectors.

"It is certainly necessary to curb inflationary expectations for which it is very essential that there should be a path of fiscal consolidation and the Finance Minister has done a commendable job by planning to reduce fiscal deficit and revenue deficit," Singh said.

What Mukherjee has done by way of social sector spending, encouraging investment in agriculture, tax concessions, "I think this budget matches the challenges that our economy faces", he said.

Singh said that Mukherjee has "walked on both legs" by keeping the taxes moderate through a simplified system.

The Prime Minister said the Finance Minister by raising the exemption of tax limit to the lowest rung of the ladder benefited all tax payers.

Noting that the budget signals a "reforms-oriented" government as Mukherjee has promised to come out with legislations regarding insurance and pension fund, Singh said, "If these promises are converted into solid acts of Parliament, this will provide a boost to capital market as well as the corporate sentiments".

Singh said the Direct Tax Code would become a reality by April 01 next year. As far as the other promises were concerned, much depends upon "what we can push through Parliament", he said.

"There is no lack of effort on part of the government. Although there are some difficulties with regard to GST as some states are not on board. I am confident we will persevere and we will succeed," Singh said.

He said that the moderation on taxes on balance was a good thing to play with and "if you are moving towards a GST, I think it is also necessary to have that end product in mind. The Finance Minister has thought it through."

The peak rates of both Customs and Exercise duties have been kept at 10 percent, he said, adding, "We cannot be too certain that everything would work their arithmetic the way we want to work. We must have ample scope to contribute to fiscal consolidation".

On social sector spending, he said these programmes required a boost in terms of delivery services and the problem has to be faced head-on.

Asked whether it was an "easy" budget, Singh said that considering the international climate and what was happening in the international financial system, maintaining a high growth was "something for which the Finance Minister and the government deserve congratulations". 

Key documents on 2G scam "untraceable" in DoT: CBI to court


New Delhi: Some crucial documents of a telecom firm given to Department of Telecom for allocation of 2G spectrum to it and forming key evidence in the scam has gone missing from the Department, CBI told a court here on Monday. 

"The documents submitted by one telecom company to DoT for allocation of spectrum, on the basis of which their (telecom firm's) priority was to be determined, are reported to be untraceable and could not yet be traced or recovered," CBI told Special CBI Judge O P Saini.
CBI made the submission in its reply opposing the bail plea of former Telecom Secretary Siddhartha Behura who was arrested with ex-Telecom Minister A Raja on February 2 for his alleged role in the 2G spectrum allocation scam. 

CBI opposed the bail plea also saying "some more documents are yet to be recovered" be them. 

Detailing the alleged role of Behura in the 2G scam, CBI said Raja and Behura had abused their official position as "public servants" and approved the file relating to verification of eligibility conditions of Swan Telecom Pvt Ltd. 

"Raja and Behura, by abusing their official positions as public servants and thereby ignoring the serious issues raised by the concerned section for further verification of eligibility conditions of Swan Telecom Pvt Ltd, have dishonestly approved the file on January 9, 2008 for issue of Letters of Intent (LoI) for 13 telecom service areas," CBI said. 

CBI said Behura, in conspiracy with Raja's former personal secretary R K Chandolia and others, had made arrangements for distribution of LoIs and responses of DoT in an arbitrary and unfair manner. 

It said Behura and others have done this in an unfair manner as the same were "neither distributed simultaneously nor on first-come-first-serve basis, but instead were distributed in a manner designed to benefit Swan Telecom Pvt Ltd and other companies." 

CBI opposed the bail plea of Behura, also saying he is "an influential person" and there is every likelihood of tampering of evidence and threatening of witnesses by him.

The court fixed March 9 to hear arguments on Behura's bail plea. 

CBI, meanwhile, sought some time from the court for filing its reply on Behura's plea that his bank accounts, sealed by CBI, be de-freezed as he needs money for treatment of his wife who had recently undergone operation for cancer. 

The court listed the matter for CBI's reply on March 15. Behura is now in judicial custody till March 3.

Union Budget: Q&A with Pranab

New Delhi: Finance Minister Pranab Mukherjee, Monday, expressed confidence that the policy direction prescribed in Union Budget 2011-12 will positively affect the life of the aam admi by addressing the problem of high inflation and pushing economic reforms.

In his interactions with the pr
ess after presenting the Budget in the Lok Sabha earlier today, Mukherjee pointed out that he had to formulate the budgetary proposals amid a lot of uncertainty across the world. “I could have done better; even then the best can be improved. I have given clear direction towards tax inflows, fiscal consolidation, and that reform always does not mean that you should attract headlines. Real reform is the change in the policy, and in its implantation which will positively affect the life of the aam admi,” he said. 


Through the Budget proposals, Mukherjee stressed that he has tried to signal reforms without making any dramatic announcements. 

Inflation 

Referring to rising inflation, the minister said, he tried to address the problem by allocating resources and come out with schemes to augment supplies of pulses and edible oil. 

"We have taken special programmes - about six-seven programmes - to be implemented under Rashtriya Krishi Vikas Yojna. I have allocated resources and schemes are being worked out for pulses, edible oil, providing fodder for the cattle, green revolution in Eastern India." 

To check high prices, he said, "we have to remove the supply bottlenecks and therefore the agriculture response should be to improve the supply bottlenecks". 

Subsidies 

The Finance Minister elaborated on the new policy on subsidy where direct cash subsidy would be given to beneficiaries of kerosene, LPG and fertiliser subsidy. 

“Everybody agrees that Kerosene is highly misused and not reaches the consumers for whom it is meant. For kerosene, fertiliser and LPG, I will go directly to the consumer. I am hopeful that by March 2012 we will be able to implement it across the country,” he said. 

On whether the government will lower the subsidy on diesel, the Finance Minister while accepting that subsidies have to be reduced, did not indicate a specific time towards achieving that target. 

He said, “We have decided that it will be done at appropriate time as on oil it would be too premature to make a decision as the situation is too volatile. For example in August 2008 crude oil prices was at USD 147 per barrel but in January 2009 it came under USD 50.” 

Fiscal deficit 

Regarding the big disparity between the nominal GDP growth (up by 40%) and borrowing (up by 4 times), the FM said that in absolute terms the level of borrowing would be same in the next year as it is in the current year. 

He highlighted his continued focus on controlling fiscal deficit by pointing that in the current fiscal he used non tax big receipts to reduce deficit. “I did not to use non tax extra money to reduce fiscal deficit and not use it for populist schemes...fiscal signal quite clear,” he said. 

The Budget, Mukherjee said, also sought to move ahead on the path of fiscal prudence by controlling expenditure and reducing fiscal deficit. The minister proposed to reduce fiscal deficit to 4.6 percent of the Gross Domestic Product in 2011-12 from 5.1 percent estimated for the current fiscal. 

"I have conveyed the message in this Budget that we shall have to resort to fiscal prudence and fiscal consolidation should take place," he said. 

Old hat political activist 

Terming himself a ‘old hat as a political activist’, Mukherjee expressed his optimism is overcoming the political opposition to certain policy issues like Goods and Services Tax and Direct Tax Code. 

“It may possible to implement DTC from April 2011, but it requires political consensus. So therefore there is challenge to bring consensus amongst political parties. I will use this year to narrow the divergent views on the issue,” he said. 

“It is not just for casual mention. We shall have to go to GST and we shall have to address the concerns of the states. I am not insensitive to the concerns of the states," he added. 

However, he accepted that a timeline for GST implementation is difficult at this stage, while assuring states that there will be no loss in revenue to them due to its implementation. 

Nobody can stop India 

On a report by Citibank that predicted that India could become largest economy by 2050, Pranab expressed optimism that it would be reality. 

“We can take on, we can move forward, let us keep our divergent views, but when the broad national interest come, let us march ahead and in more than once instance earlier, we have done it…nobody can stop India from moving ahead,” he said, adding that he would like to die with that ambition.

BUDGET - FULL TEXT