Factbox: Union budgets under the current government

NEW DELHI Fri Mar 16, 2012 6:42pm IST

Finance Minister Pranab Mukherjee speaks with the media after presenting the 2011-2012 economic survey report, outside the parliament in New Delhi March 15, 2012. REUTERS/B Mathur

Finance Minister Pranab Mukherjee speaks with the media after presenting the 2011-2012 economic survey report, outside the parliament in New Delhi March 15, 2012.

Credit: Reuters/B Mathur

Related Topics

NEW DELHI (Reuters) - India's annual budget on Friday fell short of market hopes for tougher fiscal tightening measures.

The government, facing political turmoil, fended off pressure to produce an even more populist plan, yet stopped short of offering meaningful economic reforms that might have cheered investors.

Below is a brief account of Congress-led ruling coalition's budgets since regaining power in 2009.

2012/13

Finance Minister Pranab Mukherjee faced a widening fiscal deficit, stubborn inflation and an economic slowdown ahead of the budget. There was also concern regarding the ballooning bill for oil, fertilizers and food subsidies.

The budget pegs gross domestic product (GDP) growth for fiscal year 2012/13 at about 7.6 percent, rebounding from a three-year low of sub-7 percent growth in the 2011/12 fiscal year that ends on March 31.

That was in line with many private economists' expectations, although some think growth could slow more dramatically as inflation bites and the global economy cools.

Mukherjee, in his speech, said he expected the fiscal deficit to be 5.1 percent of GDP and subsidies to be not more than 2 percent of GDP.

Yet some economists questioned how both targets could be reached, especially when the government estimated that oil prices would average a lofty $115 per barrel and there was no promise to cut fuel subsidies.

2011/12

This proved to be a very optimistic budget which underestimated the impact from weakness in Europe and the United States, as well as rising inflation at home.

When the budget was announced last year, India's economy was expected to grow at close to 9 percent in 2011/12. Weighed by food prices, a slowdown in industrial growth and a lack of major reforms, the country now is expected to achieve growth of just 6.9 percent.

The fiscal deficit for the year was pegged at 4.6 percent of gross domestic product (GDP), on the back of an expected $8.1 billion divestment in state-run companies. However, weak equity markets meant India raised less than $3 billion. Fiscal deficit targets have now been revived to 5.9 percent of GDP.

2010/11

The fiscal year of 2010/11 was marked by rising inflation, prompting a series of rate cuts by the Reserve Bank of India (RBI).

When the government presented its budget in February of that year, it thought the economy would grow at about 8.5 percent. It came pretty close to the mark, with growth coming in at 8.6 percent, "indicating a rapid recovery from the crisis and consolidation", according to a finance ministry document.

Food inflation declined from 20.2 per cent in February 2010 to less than half at 9.3 per cent in January 2011, while India was perceived to have been spared the worst of the global economic meltdown.

The document said growth across sectors was "robust" across sectors in the first half of the year, with sign of a deceleration in the latter months, a trend which led into the slowdown of 2011/12.

2009/10

This was the first budget presented after the Congress led United Progressive Alliance government came back to power. While the year began as a difficult one, just after the global financial meltdown, it turned around beginning in the second quarter due to strengthening in services sectors and higher manufacturing output, government reports say.

GDP growth was at 7.2 percent for this fiscal year, compared with 6.7 percent the previous year. The expectation when the budget was presented in July was that the fiscal deficit would grow to 6.8 percent of GDP compared with 6.2 in 2008/09.

India was one of the few countries which registered strong growth in the year after the Lehman crisis, raising expectations that it, along with other emerging economies could be cushioned from the worst of the meltdown.

Indeed, India had visions of an economic growth rate approaching double digits, rivaling China's, but the country's prospects have since dimmed. Friday's budget offered little to convince markets that those lofty targets could be reached any time soon.

(Editing by Emily Kaiser)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Market at Record

Market at Record

Sensex, Nifty hit record highs; reforms outpace hawkish Fed.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Samsung Results

Samsung Results

Smartphone woes drag Samsung Elec Q3 profit to more than 3-year low.  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage