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CONVERSATION
INDIA BUDGET 2010
INDIA BUDGET 2010
India Budget 2010
Forbes India Live Blog and Tweets on Union Budget 2010
February 26, 2010
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M.S. Swaminathan, the agricultural scientist behind the Green Revolution, likes the budget: "For first time, we are seeing an overall integrated approach to agriculture. There are provisions for cultivation, post harvest technology, commerce and conservation. To that extent, I would compliment the finance minister. "The budget speaks about conservation of soil in states such as Punjab which were the heart of Green Revolution. The budget also talks about 60,000 pulses and oil seed villages, where technology will be used, demonstrated. I think. It will be a forerunner. During the Green Revolution, we had national demonstrations of how it will work. It led to a mass movement. I think this is a good beginning. "The finance minister also added a fourth dimension (conservation, cultivation and commerce are the other three) to this: women farmers. Feminisation of agriculture is an important issue. The money he has allocated (Rs. 200 crore) is small. But I hope it's just the beginning. I see it as a recognition that as we go along there will be more support. And women in agriculture need more support. In Vidharba for example, there are women who have gone into farming, but without much support. "He has also turned his attention on the eastern area — Bihar, Orissa, Jharkhand etc. — and there is a lot of untapped production in these areas. This region is the sleeping giant of Indian agriculture. "But again, the provision is small in relation to the need. But it could be used as seed money to integrate it with other schemes, with much larger outlay, national horticulture mission etc. "About food inflation, government still has 45 million tonnes wheat and rice, and 20 million tonnes will be added soon. My concern is actually about storage. The storage conditions are not good. The government is aware of this, and it has given indication of this in budget outlay, duties and incentives to this area and so on. "But state government also has a big role to play. They have to do the implementation. If that happens, we will see some revival in agriculture. "Somewhere in the speech, he spoke about the importance of implementation and delivery. I think that's the key. "On the whole, I think this has the seeds for agricultural renewal and renaissance. It takes a much broader view on agriculture. "The greatest challenge is to bring all the schemes together, and to implement well. Finance minister is not writing thesis and he cannot spell out everything in his budget speech. The budget is good for agriculture. How we use it, how we take it forward remains to be seen." |
February 26, 2010
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There is perhaps nowhere in the world that the annual budget is treated with as much fanfare as in India. Every February, we huddle around the TV in anticipation for what the Finance Minister has to say about our taxes and education and insurance. We sit for two hours, entranced, not even getting up for tea. We cheer on or boo walk-outs staged by the opposition. We get riled up when the tax section of the speech gets announced. India has inherited the way they present the budget from the Colonial era, when the British Parliament would pass the budget at noon (or evening in India). While former Finance Minister Yashwant Sinha changed the timing to 11 a.m., India still bears a lot of similarities to the UK budget. In the UK, the Chancellor of the Exchequer makes a budget statement, or speech, just as our finance minister does. Before doing so, there’s a pre-budget report, much like our Economic Survey. And UK’s 2009 budget was greeted just as sourly as ours. But not everyone does it this way. In the US, the annual budget passes almost unnoticed. Much of the reason is that there’s no single day on which the budget is presented; it’s a year-long process. The President proposes the budget to Congress, and then it goes back and forth for quite a while until it gets a majority. While this is happening, the common man is removed from the process, often unaware of what’s being debated. Only America’s State of the Union address by the president comes anywhere close to getting the kind of attention and reception India’s budget receives. In China, the budget is equally as obtuse. While it’s presented on a single day in March (around the same time as in India), budget information was previously only available in the annual “Finance Year Book of China”; only recently did it become available online. The military budget of China gets the most attention as a single overall figure is announced. It’s a far cry from the anger inspired in this country by a one rupee hike in petrol. |
February 26, 2010
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The budget gives all the attention and focus to the agriculture and rural sector. Extending Green revolution to Eastern India with a Rs. 400-crore allocation is a great move in looking beyond Punjab for agricultural growth. Further, Pranab Mukherjee has spoken about strengthening and recapitalising regional rural banks. He also has focussed on creating storage facilities to cut grain wastage by encouraging private parties to join hands with FCI. Deferred payment of farm loans and subsidised farm credit both should help. The move to organize 60,000 pulses and oil villages looks a good idea to boost domestic production. All this is encouraging but the real breakthrough will come when the government improves its delivery mechanism and implements these plans to their fullest extent. |
February 26, 2010
| The concessional customs duty of 5 percent on import of machinery and equipments for setting up photovoltaic and solar thermal power plants will help in bringing down the overall cost of solar power. The move entails a reduced project cost and higher rate of return for project developers. Earlier the customs duty was 7.5 percent. However, there is an oversupply of solar panels and modules in the global market which is likely to last for another couple of years. So the manufacturers will really benefit only when the oversupply is absorbed. |
February 26, 2010
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Is the government finally getting ready to open up the retail sector to foreign direct investment? Pranab Mukherjee pretty much hinted as much in his budget speech. Indications are that the abnormal price rise in foodgrains may have prompted the government to consider gradually opening up the retail sector to FDI. "We need greater competition and therefore need to take a firm view on opening up of the retail trade," he quoted the prime minister as saying. Pranab argued that it will help in bringing down the considerable difference between the farm gate prices, wholesale prices and retail prices. The final decision may take about two years though, say retail industry executives. |
February 26, 2010
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Budget 2010 has provided an avenue for manufacturing companies that also run non-banking finance companies to get banking licences. Over the past 15 years or so, we have seen NBFCs like Kotak and Times Guarantee becoming banks. Now such conversions may happen in a larger number. Some of the top contenders to go in for banking licences are Reliance Capital, Religare Finance, Shriram Transport group, L&T finance and Magma Fincorp. Now, consider Magma Fincorp which was traded this afternoon at Rs. 247.80 (up 7 percent over yesterday’s close). This company has an interesting shareholding pattern with Reliance Infrastructure accounting for 9.82 percent India Capital Fund at 7.52 percent and Citigroup Global at 7.52 percent. |
February 26, 2010
| The government is set to raise more than Rs 3,000 crore from the clean energy cess on Indian and imported coal. Domestic consumption is expected to be 604 million tonnes in the current fiscal year, including 47 million tonnes of imports. The demand is expected to rise 7.8 percent netx year, taking consumption to 647 million tonnes in 2010--2011. That’s a cool Rs. 3,235 crore. |
February 26, 2010
| The Plan allocation for education has gone up from Rs. 26,800 crore to Rs 31,036 crore and most of it will go to implementation of Right to Education. Going by a ballpark estimate of Rs 172,000 crore that is needed to implement RTE over the next five years, this means that there is a Rs 30,000 crore budgetary allocation in the first year. That is a fairly decent allocation. Let’s also not forget that around 30-35 percent of these funds will have to come from the states. |
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