Minister of Finance
February 28, 2013
I rise to present the Budget for the year 2013-14.
I recall my last tenure as Finance Minister and acknowledge with gratitude the splendid support that I received from all sections of the House as well as the people of India. Today, more than ever, I seek the same support as we navigate the Indian economy through a crisis that has enveloped the whole world and spared none.
I intend to keep my speech simple, straight forward and reasonably short.
I. THE ECONOMY AND THE CHALLENGES
I shall begin by setting the context. Global economic growth slowed from 3.9 percent in 2011 to 3.2 percent in 2012. India is part of the global economy: our exports and imports amount to 43 percent of GDP and two-way external sector transactions have risen to 108 percent of GDP. We are not unaffected by what happens in the rest of the world and our economy too has slowed after 2010-11. In the current year, the CSO has estimated growth at 5 percent while the RBI has estimated growth at 5.5 percent. Whatever may be the final estimate, it will be below India’s potential growth rate of 8 percent. Getting back to that growth rate is the challenge that faces the country. 5.
Let me say, however, there is no reason for gloom or pessimism. Even now, of the large countries of the world, only China and Indonesia are growing faster than India in 2012-13. And in 2013-14, if we grow at the rate projected by many forecasters, only China will grow faster than India. Between 2004 and 2008, and again in 2009-10 and 2010-11, the growth rate was over 8 percent and, in fact, crossed 9 percent in four of those six years. The average for the 11th Plan period, entirely under the UPA Government, was 8 percent, the highest ever in any Plan period. Achieving high growth, therefore, is not a novelty or beyond our capacity. We have done it before and we can do it again.
I acknowledge that the Indian economy is challenged, but I am absolutely confident that, with your cooperation, we will get out of the trough and get on to the high growth path. I shall now outline our plans and priorities. 7.
Our goal is ‘higher growth leading to inclusive and sustainable development’. That is the mool mantra.
Growth is a necessary condition and we must unhesitatingly embrace growth as the highest goal. It is growth that will lead to inclusive development, without growth there will be neither development nor inclusiveness. However, I may sound a note of caution. Owing to the plurality and diversity of India, and centuries of neglect, discrimination and deprivation, many sections of the people will be left behind if we do not pay special attention to them. As Joseph Stiglitz, Nobel prize-winning economist, said, “There is a compelling moral case for equity; but it is also necessary if there is to be sustained growth. A country’s most important resource is its people.” We have examples of States growing at a fast rate, but leaving behind women, the scheduled castes, the scheduled tribes, the minorities, and some backward classes. The UPA does not accept that model. The UPA Government believes in inclusive development, with emphasis on improving human development indicators. I hope this Budget will be yet another testimony to that commitment.
Fiscal Deficit, Current Account Deficit and Inflation
The purpose of a Budget – and the job of a Finance Minister – is to create the economic space and find the resources to achieve the socio economic objectives. At present, the economic space is constrained because of a high fiscal deficit; reliance on foreign inflows to finance the current account deficit; lower savings and lower investment; a tight monetary policy to contain inflation; and strong external headwinds. During the course of my speech, I shall spell out measures that will address each of these issues.
In September, 2012, Government...