The Indian Budget 1996-97 The Indian Economy Overview


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Centre-State Relations

  1. I have already made a reference to the Chief Ministers' Conference on Basic Minimum Services. The Prime Minister intends to call another conference of Chief Ministers to discuss the political aspects of Centre-State relations and federalism. At the last conference, the Chief Ministers expressed the view that many centrally-sponsored schemes should be retained as such and should continue to be funded by the Central government. While we respect the views of the Chief Ministers, it is our desire that most Centrally-sponsored schemes should be transferred to the control of the State governments. In the meantime, States will be given greater flexibility in the implementation of these programmes. Provisions available under all other schemes will be pooled and the basic entitlement ratio will be worked out for each State. The States will be free to select for implementation, within their annual entitlement, such schemes that are more suited to their needs. The Ministry of Planning and Programme Implementation is working on the revised guidelines and procedures in consultation with the concerned Ministries and the States.

  2. I also intend to circulate a discussion paper to Hon'ble Members on the 10th Finance Commission's recommendation to form a single divisible pool of taxes to be shared between the Centre and the States. Prima-facie, the Finance Commission's recommendation appears to be in the national interest but it will require an amendment to the Constitution. Hence, I wish to encourage a debate before a final decision is taken.

  3. The Common Minimum Programme has promised that the Government will, within six months, bring out a detailed document that will articulate the priorities and programmes of the Ninth Plan. While a number of programmes have been initiated in this Budget, it will be our endeavour to prepare an Approach Paper to the Ninth Five Year Plan within four months. The Ninth Plan will target a growth rate of 7% per annum and will articulate strategies for decentralisation of responsibilities, for raising resources and for ensuring widespread growth. The initiatives that have been taken this year will be followed by a more comprehensive programme of social and economic development with the focus on elimination of poverty.
  4. I shall now briefly go over the Budget estimates.

  5. As Hon'ble Members are aware details of the revised estimates for 1995-96 were presented along with the interim Budget in February 1996. I am, therefore, not going over those estimates again. The figures that are given below are the budget estimates for 1996-97 and for plan expenditure I shall compare them with the budget estimates for 1995-96.

  6. For 1996-97, the total expenditure is estimated at Rs.204,698 crore. Of this, Rs.54,685 crore is gross budgetary support for the Central Plan and assistance to State and UT plans, representing a sharp increase of 13% over Rs.48,500 crore. Non-plan expenditure is placed at Rs.150,013 crore.

  7. Central assistance for State and UT plans is being stepped up from Rs.19,506 crore to Rs.21,972 crore. The increase will provide funds to the States for implementing the seven Basic Minimum Services schemes to which I have referred earlier.

  8. Gross budgetary support for the Central Plan is being enhanced from Rs.28,994 crore to Rs.32,713 crore.

  9. All anti-poverty programmes will be reviewed with a view to strengthening them and providing them with more funds. The plan allocation for the Department of Rural Development has been increased from Rs.1,263 crore to Rs.2,195 crore. The plan allocation for the Department of Rural Employment and Poverty Alleviation is Rs.6,437 crore.

  10. The plan allocation for the Department of Fertilizers has been increased from Rs.205 crore to Rs.373 crore in order to increase domestic production.

  11. For tapping the potential of non-conventional energy sources, the plan allocation for the Ministry of Non- Conventional Energy is being raised by Rs.87 crore to Rs.334 crore.

  12. Mr. Speaker, Sir, I hope Hon'ble Members will forgive the Finance Minister if he is partial to the cause of exports. After all, I cut my teeth in economic administration in the Ministry of Commerce. Promotion of exports must remain high on our agenda. Hence, I propose to provide a sum of Rs.50 crore for the corpus of the recently established India Brand Equity Fund. I would appeal to industry and trade to contribute at least an equal amount in this financial year itself. A sum of Rs.25 crore has been provided for critical balancing infrastructure. Non-plan provision for export promotion and market development has been enhanced from Rs.315 crore to Rs.460 crore. Deemed exporters will now get refund of terminal excise duty in quick time.

  13. The plan allocation for the Department of Health has been stepped up from Rs.647 crore to Rs.792 crore.

  14. The plan allocation for the Department of Education has been increased substantially from Rs.1,825 crore to Rs.3,388 crore. This will help in implementation of the District Primary Education Programme and the mid-day meal scheme.
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