Manmohan Singh – 1996 Budget

Finance Minister Manmohan Singh
Budget Year :1996

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Manmohan Singh

Sir,  I rise to present the Interim Budget for 1996-97.

2 . Five years ago, the people of India gave a mandate to our Party, under the  courageous and far-sighted leadership of Prime Minister Shri P.V. Narasimha Rao.  We took office at a time when the economy was on the brink of collapse. Inflation  was out of control, exports were declining, foreign exchange reserves had declined  to no more than two week’s imports and industry was virtually crippled. We had to  give the highest priority to restoring macroeconomic stability and then, as quickly  as possible, to bring the economy back to a path of rapid and equitable economic  growth.

3 . The strategy we have followed has been outlined before this House by the  Prime Minister himself on several occasions. We have sought to accelerate the rate  of growth of our economy and achieve broad-based development, which alone can  ensure a rising standard of living for all our people. We have sought to modernise  our economy, improve productivity and increase efficiency in all sectors. We have  sought to integrate our economy more effectively with the world, so that we can  compete successfully in world markets and also attract larger volumes of investment,  as so many other countries in Asia have done to their advantage. Above all, we  have sought to ensure that in this process the needs of the poorer sections of our  society are constantly kept in view. As the private sector has expanded vigorously  into many areas which were earlier reserved for the State, the focus of State activity  and the deployment of public resources is now being concentrated on meeting the  needs of the poor and on the social sectors such as health, education and rural  infrastructure where the market economy alone cannot bring benefits rapidly.

4 . The journey of the past five years has been both difficult and rewarding. I  would not say that we have achieved all that we wanted. But, I believe we can  honestly say that the results we have achieved amply vindicate our approach and  aspirations. Let me briefly review the progress in some important areas.

5 . Inflation is our worst enemy and it hurts the poor more than anyone else.  Control of inflation was therefore our first priority. We worked hard to achieve this  objective by reducing the fiscal deficit, curbing the growth of money supply and  1  2  increasing the supply of essential commodities. The result is evident. The annual  rate of inflation was as high as 17 per cent in August 1991. It has been brought  below 5 per cent in February 1996, the lowest level since 1988. Furthermore, the  annual rate of price increase of essential commodities, such as wheat, edible oils  and sugar, is even lower. To mitigate the impact of inflation on the poorer sections,  the Public Distribution System has been strengthened. The revamped PDS has  been extended to 1775 blocks in tribal, hilly, desert and other remote areas. A  further expansion of RPDS to more than 650 additional blocks is in process.

6 . Our policies have also produced a resurgence of economic growth. After  slumping to less than one per cent in the crisis year of 1991-92, the rate of growth  of Gross Domestic Product rebounded to 5 per cent per annum in both 1992-93  and 1993-94. It then accelerated to 6.3 per cent in 1994-95 and continued high  growth of 6.2 per cent is estimated for 1995-96. By any standards this has been  one of the swiftest and strongest recoveries from a serious macroeconomic crisis in  the entire world. In the first four years of the Eighth Plan, growth has averaged 5.7  per cent. This is in line with the Plan target of 5.6 per cent.

7 . This exceptional recovery has been under-pinned by strong performance of  all major sectors of the economy. Agriculture provides livelihood for two-thirds of  our people and has been given high priority in our policies. We have provided more  remunerative prices. We have removed barriers to internal and external trade in  agricultural commodities. We have encouraged agro-processing activities. We have  sharply reduced the bias against agriculture in our foreign trade policies. The goal  has been to quickly expand income-earning opportunities for our farmers.

8 . Honourable Members will join me in paying handsome tribute to our farmers.  They have responded superbly to these new policies. Agricultural production declined  during the crisis of 1991-92 but thereafter it has grown by more than 4 per cent  per year, on average, in the next three years. Food production also rose by more  than 4 per cent per year, on average, to reach a record level of 191 million tonnes  in 1994-95. A similar bumper output is expected in 1995-96. Foodgrain production,  however, is only one part of the story. Agriculture has also diversified. Milk production  has gone up by nearly 10 lakh tonnes between 1990-91 and 1994-95. The production  of fruits and vegetables has also increased substantially.

9 . So much for those critics who used to claim that our policies have neglected  agriculture.

10. Our industry has responded magnificently to the stimulus of our policies of  unshackling domestic industry and to the challenge of international competition.  Many had predicted that the liberalisation of imports would swamp domestic  industry. We had more confidence in our industry. Five years ago I had said that  “our entrepreneurs are second to none”. They have amply vindicated the faith we  placed in them. Industrial production was stagnant in 1991-92. It recovered robustly  to grow by 6 per cent in 1993-94 and then further increased to 8.6 per cent in  1994-95. Industrial growth has accelerated to 12 per cent in the first half of 1995-  96. Capital goods production surged in 1994-95 by 25 per cent. This is more than  twice the growth recorded by the other broad categories of basic goods, intermediate  3  goods and consumer goods. The capital goods sector continued to outpace the  other sectors in the first half of 1995-96, recording a growth of 14.3 per cent. This  has happened despite the opening up of the economy to competition from imports.  None can now doubt the inherent strength and competitiveness of our industry.

1 1 . I am particularly happy to inform Honourable Members that our reform  policies have given a special boost to small scale industry. In each year after the  crisis, the production from small scale industry has grown faster than overall  industrial production. For example, in 1993-94 output of small scale industry rose  by 7.1 per cent, whereas overall industrial production grew by 6.0 per cent. Similarly,  in 1994-95 small scale industrial growth of 10.1 per cent outpaced overall industrial  growth of 8.6 per cent.

1 2 . As I have already mentioned our strategy of reform accorded the highest  priority to improving the living standards of the poor. We have pursued a threepronged  approach of promoting rapid, broad-based, employment-generating growth,  broadening and deepening special programmes for poverty alleviation and  employment generation and giving a strong thrust to programmes for social sectors  and social security. In 1991 our critics had warned that economic reforms would  lead to massive unemployment and the poor would bear the brunt of adjustment.  The results show that these fears were misplaced.  · The total increase in employment in the economy was 3 million in 1991-  92. It doubled to an average of 6 million in the next two years and exceeded  7 million in 1994-95. Employment growth is likely to be even higher this  year. This compares with an average increase of less than 5 million per  year in the eighties.  · The latest Planning Commission estimates of poverty show a significant  decline in the proportion of people below the poverty line. The proportion  fell from above 25 per cent in 1987-88 to below 19 per cent in 1993-94.  · The average real wage for unskilled agricultural labour, one of the weakest  sections of our society, also shows improvement. Real wages fell by 6 per  cent in the crisis year of 1991-92. Thereafter they rose steadily at an  annual rate of 5 per cent in each of the next three years.

1 3 . Despite tight fiscal constraints, we have, in the three years between  1992-93 and 1995-96, increased the Central Plan budget allocation for rural  development by about 150 per cent, for education by over 90 per cent, for elementary  education by nearly 130 per cent and for health by over 120 per cent. We have  launched important new programmes and initiatives for the weaker sections.  · The Employment Assurance Scheme provides assured employment for 100  days to unskilled rural poor at the rate of two persons per family in 3175 poorest  blocks of the country during the lean season.  · The Prime Minister’s Rozgar Yojana is designed to generate employment  through setting up micro enterprises by educated unemployed. In 1994-  95, 1.9 lakh beneficiaries were sanctioned loans under the scheme. The  target for 1995-96 is 2.6 lakh beneficiaries.  · The National Social Assistance Programme has three key components.   The first provides monthly old age pension from the Central Government  of 75 rupees to those below the poverty line. This is expected to benefit 54  lakh people. Second, there is a lump-sum survivor benefit on the death of  the primary bread winner in poor households of 10,000 rupees in the  case of accidental death and 5,000 rupees in the case of death from  natural causes. This is expected to benefit 4.5 lakh families a year. Third,  there is a maternity benefit of 300 rupees for expectant mothers. This is  anticipated to benefit 46 lakh women each year.  · The Mid-day Meal Programme is intended to improve nutrition and school  attendance of 11 crore children in classes I to IV in 3 years. In the first  year of the scheme 3.4 crore children have already been covered.  · Under the Indira Awas Yojana 4 lakh houses were built for poor families  in rural areas in 1994-95. 10 lakh houses will be built under the Scheme  in 1995-96.  · The Mahila Samridhi Yojana aims at empowering women through giving  them greater control over household savings.  · The Rural Infrastructural Development Fund has been established in  NABARD. It will provide Rs.2,000 crore for completing ongoing projects of  medium and minor irrigation, soil conservation and other rural  infrastructure.  · Bank credit for village and khadi industries is being expanded through  the provision of a special bank consortium fund of Rs.1,000 crore.  · A new Group Life Insurance Scheme of the LIC to provide life cover of  5,000 rupees to each person is being implemented by Panchayats in rural  areas, with a subsidized premium for poor households.  · The National Backward Classes Finance and Development Corporation,  which we set up in 1992, has sanctioned over Rs.250 crore of loans to  beneficiaries.  · The National Scheduled Castes and Scheduled Tribes Finance and  Development Corporation has sanctioned loans of Rs.400 crore.  · The National Minorities Development and Finance Corporation for assisting  development of backward sections among minorities has become  operational.  · The Handicapped Development and Finance Corporation is being  established with authorised capital of Rs.400 crore.

1 4 . We are proud of the role played by the Indian workers in accelerating  the pace of industrial development. A number of steps have been taken to protect  and promote their interests. We have raised the eligibility limit for payment of  bonus from Rs.2,500 to Rs.3,500 per month and the ceiling for calculation of  bonus from Rs.1,600 to Rs.2,500 per month. Earlier, Government had increased  the ceiling under the Payment of Gratuity Act to enable workers to get gratuity up  to Rs.1 lakh. The revised ceilings for bonus eligibility and bonus calculation are  applicable to both non-government and to government employees. We gave one  installment of Interim Relief to government employees even before the establishment  5  of the Fifth Central Pay Commission. A second installment was given subsequently  on the basis of an interim report of the Pay Commission. Interim Relief has also  been given to pensioners and family pensioners. We have also merged a portion of  Dearness Allowance with pay for calculating gratuity.

1 5 . History was made with the passage of the Constitution (Seventy Third  Amendment) Act, 1992, which made it a constitutional requirement to set up in  every State, Panchayats at the village, intermediate and district levels. The  Amendment ensures that women and other weaker sections of the society will  necessarily get adequate representation in the Panchayats. This is a major step  forward for the empowerment of these under-privileged sections of the society. To  make this devolution of power a reality, each State is required to set up a Finance  Commission to recommend the principles which should govern the distribution of  the State revenue between the State and the Panchayats. The Tenth Finance  Commission has also allocated a sum of about Rs.4,400 crore to be given to the  Panchayati Raj Institutions over the next four years.

1 6 . The crisis of 1991 was most visibly reflected in our balance of payments.  In the past five years, our foreign trade and external payments policies have  transformed weakness into strength.  · Exports declined in dollar value in 1991-92. They grew by 20 per cent in  1993-94, and by 18 per cent in 1994-95. Export growth has accelerated  to 24 per cent in the first 9 months of 1995-96.  · Trade liberalization has actually increased our self-reliance in foreign trade.  The ratio of export earnings to import payments has risen from an average  of 60 per cent in the eighties to 90 per cent in the last two years.  · Foreign investment has risen from less than 200 million dollars in 1991-  92 to nearly 5 billion dollars last year. Direct foreign investment flows are  expected to rise to about 2 billion dollars this year. Honourable Members  will be happy to hear that over 85 per cent of foreign investment approvals  are in the priority sectors, including infrastructure, and more than 80 per  cent of proposals involve joint ventures with Indian companies.  · On the eve of the 1991 crisis, our external debt was rising at 8 billion  dollars per year. In the four and half years from April 1991 to September  1995, the growth of external debt has averaged only 2.2 billion dollars per  year. The ratio of external debt to GDP has fallen from a peak of 41 per  cent in 1991-92 to about 29 per cent in September 1995. Correspondingly,  debt service payments, as per cent of current earnings, are likely to drop  from above 35 per cent in 1990-91 to below 27 per cent in 1995-96.  Furthermore, the proportion of short-term external debt has been brought  down from above 10 per cent in March 1991 to below 5 per cent in  September 1995.

1 7 . As part of the economic reforms, we have undertaken sweeping  measures to strengthen our banking system and capital markets. As a result, the  number of public sector banks declaring operating losses has fallen dramatically  from 8 in 1992-93 to only one in 1994-95. The average ratio of non-performing  assets to total advances of public sector banks has also declined significantly from  26 per cent in 1992-93 to 20 per cent in 1994-95. An ambitious programme for  rehabilitation and restructuring of Regional Rural Banks has been launched.

1 8 . Our programme of capital market reform has greatly increased the  mobilization of investible funds through primary issues from about Rs.6,000 crore  in 1991-92 to over Rs. 27,500 crore in 1994-95. Even more important, we have  strengthened regulation and supervision over the capital markets with a view to  improving the transparency, efficiency and integrity of our stock exchanges.  Systematic and determined efforts have been made to modernize the infrastructure  and working of capital markets. In 1992 the National Stock Exchange did not exist.  By 1995, this modern, computerized and screen-based exchange, which sets new  standards of transparency in trading, accounted for more trading volume than any  other stock exchange in the country. We have also taken steps to establish a  system of depositories which will greatly improve our settlement systems.

1 9 . Our reforms in the financial sector are designed to promote savings  and investment in our economy. As I have stated earlier, we must rely more and  more on our own resources to finance the process of development. I am happy to  report to this august House that our thrust towards self-reliance has met with  success. Last year our rate of gross domestic savings (as a ratio to GDP) set a new  record of 24.4 per cent, higher than at any time in our history. This financed a high  rate of gross domestic investment, 25.2 per cent of GDP, and supported a record  high level of real gross fixed investment, at 22.2 per cent of GDP.

2 0 . To summarize, Mr. Speaker Sir, our economy today is growing faster  than 6 per cent per year. Industry is growing rapidly. Agricultural production is  strong. Food stocks are high. Employment growth is buoyant. Poverty is declining.  Inflation is at its lowest ebb in many years. Exports are booming. Foreign investment  is buoyant. Foreign exchange reserves are comfortable. And the level of savings  and investment is high.

2 1 . These are all impressive economic achievements. They are the direct  result of the political leadership and vision of the Prime Minister in bringing about  an evolution in our policies which has enabled our workers and our farmers, our  entrepreneurs and our managers, our scientists and other professionals to  demonstrate their inherent potential. The dynamism that has been unleashed augurs  well for the future. And yet, the tasks of economic reform are by no means over.  Whichever government comes to power after the elections, will face the challenge of  maintaining and improving on the strong record of economic performance of the  past few years. The task will not be easy. A further reduction in the fiscal deficit  will be essential to keep inflation low, reduce interest rates and prevent pressure  on the balance of payments. We have begun the process of inducting private  investment into key infrastructure sectors such as power, telecommunications,  petroleum, roads and ports. There has already been strong response to our initiatives  in the power and telecommunications sectors and private investment in roads,  bridges and ports has also begun. But we will need to build on these initiatives and  undertake further reforms of the policy framework for key infrastructure sectors to  ensure high levels of public and private investment, efficient operation and expanded  provision of reliable services, in adequate supplies and at affordable prices.  Systematic reforms will have to be pursued in power, coal, petroleum, roads and  ports, if the current buoyancy in economic growth, employment and exports is to  be sustained. Further reforms in trade and industrial policy are necessary.  Restructuring and reform of public enterprises must be pursued with vigour. Our  system of industrial relations also needs reform. The performance of our social  sectors, especially primary education and health, has to improve further  substantially. The same goes for irrigation and other forms of rural infrastructure,  whose extent and quality determine the conditions within which three-quarters of  7  our citizens live and work.

2 2 . These and other challenges will face the Government which will take  office after the elections. On our part I can only say that our Government, under  the leadership of Prime Minister Shri P.V. Narasimha Rao, has shown that it has  the will and vision to face the challenges ahead and do what is necessary for India’s  economic and social progress to forge ahead.

2 3 . I shall now briefly go over the Revised Estimates for 1995-96.

2 4 . Budget Estimates for 1995-96 had placed the total expenditure at  Rs.172,151 crore. This is now expected to go up to Rs.183,004 crore, showing an  increase of Rs.10,853 crore.

2 5 . Plan expenditure in the year 1995-96 was estimated at Rs.48,500 crore  in the Budget Estimates. It is now expected to go up to Rs.48,684 crore. To provide  for the increased requirement of rural development sector and for schemes  announced during the year, I have had to make some adjustments in allocations.  The revised estimates show an increase of Rs.551 crore for Plan expenditure in  rural development and an increase of Rs.679 crore in education. Central assistance  to State and U.T. Plans, which was estimated at Rs.19,506 crore is now expected  to increase to Rs.19,854 crore.

2 6 . On the non-Plan side I have provided for an additional sum of Rs.1,085  crore on account of food and fertilizer subsidies. I have also had to make provision  for Rs.3,112 crore for increased loans to States and Union Territories as their  share in small savings collections, which have far exceeded budget expectations.  The Interim Relief granted to the Central Government employees and pensioners  will result in additional expenditure estimated at about Rs.1,650 crore in the current  financial year. A sum of Rs.1,010 crore has been provided as write off of loans of  State Governments. An additional sum of Rs.1,379 crore has been provided for  defence expenditure, to keep up the level of defence preparedness. I have also had  to provide an additional Rs.266 crore for expenditure on police in keeping with our  heightened internal security requirements. There has also been an increase in  expenditure of Rs.745 crore on account of loans to public sector enterprises mainly  for payments of salaries and wages. Total non-Plan expenditure has entailed an  additional provision of Rs.10,669 crore.

2 7 . I am happy once again to report to this august House that our tax  reforms have continued to yield benefits beyond our expectations. This is shown by  the much higher receipts both in direct and indirect taxes. Gross tax revenues are  now expected to exceed budget estimates by Rs.6,592 crore and reach Rs.110,354  crore. Our strategy of tax reforms, consisting of moderate rates but tighter  administration and expanded coverage, will need to be actively pursued so that we  are able to get even higher returns in the years to come. Officers of the Revenue  Department, whose dedication and untiring efforts have helped in achieving these  exemplary results, deserve commendation.

2 8 . Non-tax revenues, which constitute an important component of our  receipts, have also shown healthy buoyancy. Receipts under this head, which were  estimated at Rs.26,413 crore in the Budget, are now expected to be Rs.29,103  crore in the revised estimates. I am glad to inform the House that non-tax receipts  include Rs.1,850 crore as licence fee from the private operators of cellular telecom  services. These receipts to General Revenues will enable the Government to provide  larger resources for high priority development activities. The House is aware that  8  the Supreme Court judgement a few days ago has vindicated the Government’s  stand and cleared the way for allocation of licenses for basic telecom services.  However, because of some uncertainty with regard to timing of receipts and as a  matter of abundant caution, I am not taking credit for license fees from operators  of basic telecom services during the current year.

2 9 . Non-debt creating capital receipts from disinvestment of government  equity in public sector undertakings will be much lower than budgeted, mainly  because of somewhat depressed conditions in capital markets for much of the year.  These receipts will only amount to Rs.357 crore as compared to budget expectations  of Rs.7,000 crore.

3 0 . Taking into account the variations in receipts and expenditures, the  current year is expected to end with a budget deficit of Rs.7,600 crore. The fiscal  deficit was originally budgeted at Rs.57,634 crore and placed at 5.5 per cent of  GDP. It is now expected to be Rs.64,010 crore. This amounts to 5.9 per cent of  GDP. Most of the deterioration in the fiscal deficit compared with the budget estimates  is due to the increased mobilisation from small savings. Three quarters of small  savings collections are on-lent to the States. Therefore, when small savings collections  exceed budget estimates, the Centre’s fiscal deficit increases. If small savings  collections this year had not exceeded the budgeted level, the fiscal deficit would  have been only 5.6 per cent of GDP.

3 1 . Coming to the tax and expenditure policies for 1996-97, these must  take into account the medium term objectives for accelerated economic and social  development in the next five years. Broadly stated, these objectives are:  (a) To pursue macroeconomic policies seeking to accelerate the rate of  economic growth to 7 to 8 per cent per annum in a framework of reasonable  price stability.  (b) To design a pattern of growth which would lead to an annual increase of  over 10 million new jobs.  (c) To refashion economic and social policies to reduce the proportion of  people living below the poverty line to less than 10 per cent by 2001.  (d) To ensure that Indian agriculture continues to grow at an annual rate of  at least four per cent per annum, with strong emphasis on the use of  modern science and technology to promote diversification of cropping  pattern and special efforts to increase the productivity of dry land  agriculture and ecologically fragile regions.  (e) To further strengthen Indian industry to meet the challenge of international  competition and ensure sustained growth of exports of about 25 per cent  per year.  (f) To expand and improve the quality of economic infrastructure of power,  transport, communications and roads, laying particular emphasis on  speedy reduction of regional imbalances in levels of development.  (g) To strengthen and expand social safety nets to provide more effective and  direct assistance to vulnerable sections.  (h) To ensure universal access to elementary education by the year 2001,  laying particular emphasis on the girl child and imparting a strong  vocational bias to secondary education.    (i) To expand primary health care facilities through a programme of national  health insurance for those below the poverty line and with strong emphasis  on reduction in infant mortality rates to the levels prevailing in States like  Kerala.  (j) To expand substantially the programmes relating to provision of shelter,  rural housing and slum improvement.  The realisation of these objectives will require many new programmes. However,  constitutional propriety demands that these programmes, involving a mix of both  tax and expenditure policies, are worked out by the government which will come  into office after the forthcoming elections to the Lok Sabha. The interim Budget for  1996-97 therefore does not include any new programmes.

3 2 . I am presenting an interim Budget for the purpose of a Vote-on-Account  to enable the Government to meet expenditure during the first 4 months of the  next financial year. The Demands for Grants and the Annual Financial Statement,  which are for the entire financial year, would be revised as necessary at the time of  presentation of the regular budget.

3 3 . I now turn to the budget estimates for 1996-97. I am proposing an  increase in the estimates for Plan expenditure from Rs.48,500 crore in BE 1995-96  to Rs.50,521 crore in BE 1996-97. The budget support proposed for the Plan is  interim and will need to be reviewed at the time of the regular budget exercise.  However the amount I am now providing will ensure that the tempo of development  activities is maintained and the full year requirements of major social sector schemes  launched during the course of the current year are fully provided for.

3 4 . I have tried to ensure that increased budgetary support is provided for  rural development and social sectors.  · Members may recall that in keeping with the priorities of our Government  the outlay for rural development programmes during the Eighth Plan period  was stepped up substantially to the level of Rs.30,000 crore from the  actual expenditure of Rs.11,000 crore during Seventh Plan. With the  proposed allocation of Rs.8,692 crore for 1996-97, the total expenditure  during the Eighth Plan will be of the order of Rs.33,400 crore. This amounts  to a more than three-fold increase over the actual expenditure during the  Seventh Plan.  · I have proposed to provide an increase in budgetary support of about  Rs.880 crore for Plan expenditure in education to ensure that  implementation of the Mid-Day Meal Scheme does not in any way suffer  on account of resources. 7.2 crore children are expected to benefit from  this programme in 1996-97.  · I am also raising the allocation for the National Social Assistance  Programme from Rs.550 crore in 1995-96 to Rs.932 crore in 1996-97.  · I propose to increase the allocation for Indira Awas Yojana so that more  than 10 lakh houses are provided for the rural poor in 1996-97.  · A provision of Rs.448 crore has been made for the Million Well Scheme so  that small and marginal farmers who are below the poverty line are provided  with remunerative assets for meeting their water needs.  · The Employment Assurance Scheme which was launched in October, 1993,  10  has elicited heartening response. A provision of Rs.1,970 crore has been  made for this scheme during 1996-97.

3 5 . The total non-Plan expenditure during 1996-97 is estimated to be  Rs.151,503 crore compared to Rs.134,320 crore in revised estimates for the current  year. A major factor which has been contributing to the sizeable increase in our  non-Plan expenditure is the interest burden. The provision for interest payments  during 1996-97 is estimated to be Rs.60,000 crore as against Rs.52,000 crore in  the current year. Interest payments represent mainly the legacy of past borrowings.  Indeed, they would have been even higher but for our success in reducing the fiscal  deficit in recent years. Members will appreciate that our emphasis on reducing the  fiscal deficit will pay rich dividends in the form of reduction of interest burden in  the years to come. There should be no slackening in our resolve to bring the fiscal  deficit to a more manageable and affordable level. This together with continued  reforms of our tax system, generation of more internal resources by public sector  enterprises, greater disinvestment in public sector enterprises and containing  subsidies to affordable levels will free resources for higher priority development  needs.

3 6 . I am providing Rs.27,819 crore for defence in this Interim Budget as  against Rs.25,500 crore in the budget estimates for 1995-96. Defence preparedness  is vital for our national security and the House can rest assured that we will not  compromise with our country’s security. The provision for defence will be further  revised at the time of preparation of the regular budget. I am also providing Rs.5,774  crore for food subsidy and Rs.6,800 crore for fertilizer subsidy. An amount of  Rs.5,000 crore is being provided to meet contingent expenditure. A sum of Rs.400  crore has also been provided for the conduct of general elections to the Lok Sabha.

3 7 . Coming to receipts, the estimates of tax revenues have been made at  existing rates of taxation in the interim Budget. Gross tax revenue at existing levels  of taxation is placed at Rs.128,540 crore. States’ share of taxes next year is estimated  at Rs.34,027 crore compared to Rs.29,266 crore in the revised estimates of the  current year. Taking into account the maturing liability, the net small savings  collections are placed at Rs.15,716 crore in 1996-97. I am taking a credit of Rs.5,000  crore next year as receipts from disinvestments as continuation of the policy of  mobilising non-inflationary resources. I am also expecting an increase in dividends  and have estimated these receipts at Rs.4,051 crore in 1996-97.

3 8 . Taking into account the changes in receipts and expenditure, total net  revenue receipts of the Centre, at the existing rates of taxation, are estimated at  Rs.127,162 crore and total expenditure is estimated at Rs.202,024 crore. The budget  deficit during 1996-97 is estimated to be Rs.5,000 crore and the fiscal deficit is  estimated to be Rs.62,404 crore. My proposals in the interim Budget will take us  further in the direction of bringing down the fiscal deficit to more manageable  proportions. I expect that on the basis of these estimates the fiscal deficit during  1996-97 will be 5 per cent of GDP. I would have liked to do better. I am restrained  in my efforts because I am presenting an interim Budget at this stage. But I am  sure that these efforts will provide a sound foundation for enhanced efforts in this  direction.

3 9 . I propose to introduce a Finance Bill which seeks to continue the existing  rates of Income Tax in the financial year 1996-97. I am not proposing any changes  in the rates of Custom and Central Excise duties.

4 0 . Mr. Speaker, Sir, I have sought to outline our achievements, the  11  unfinished task that lies ahead, as well as our vision of the future economic and  social agenda we must pursue to realize the national goal of an India free from the  fear of war, want and exploitation; an India which takes full advantage of modern  science and technology to build a strong, self reliant and internationally competitive  economy; an India firmly committed to the twin pursuit of excellence and social  equity in the framework of an open society and democratic polity based on the rule  of law and abiding faith in fundamental human freedoms.

4 1 . In my first budget speech to this Honourable House on 24th July  1991, I had stated, quoting Victor Hugo, that no power on earth could stop an idea  whose time had come. I had also suggested to this House that the emergence of  India as a front ranking economic power house of the world economy happened to  be an idea whose time had indeed come. Despite enormous challenges and  difficulties, we have worked earnestly to give concrete shape to this dream. We are  already the sixth largest economy of the world. We are determined to further move  up this ladder. But this will require far-sighted political leadership, sustained hard  work and willingness to accept utmost discipline in our national life. We cannot  afford to fritter away the vast energies of our nation in senseless communal strife  or caste and class wars. Nor can we allow the national commitment to Swadeshi to  be misused by the forces of obscurantism to perpetuate economic backwardness  and prevent India from occupying her rightful place in the world. As Jawahar Lal  Nehru taught us, in an interdependent world, Swadeshi must not be interpreted to  mean economic isolation but rather self reliance in building a prosperous India  which interacts as an equal with other countries in the world. We seek to build a  new India which, in the words of Gandhiji, will be like a house with windows open  on all sides; let ideas from all the cultures and civilisations of the world freely flow  in; but we must refuse to be blown off our feet by any one of them. This is the true  essence of Swadeshi and we shall not compromise on this essential principle.

4 2 . India is on the threshold of exciting new opportunities. Gandhiji used  to say that the central disease of India is its deep poverty and deeper ignorance.  Thanks to recent developments in science and technology, it is now possible as  never before to wage a successful war against poverty, ignorance and disease.  Drawing inspiration from the high ideals and humanism of Swami Vivekananda,  Mahatma Gandhi, Gurudev Rabindranath Tagore and Pandit Jawahar Lal Nehru,  our party and Government reaffirm our solemn commitment to successful pursuit  of this giant national enterprise. We shall overcome.

4 3 . Mr. Speaker, Sir, this is the last session of the present Lok Sabha.  Soon, our people will be called upon to exercise their sovereign democratic right to  choose the next Government. Undoubtedly, their choice will have a profound bearing  on the future of our polity and the well being of our children and our grand children.  Time and again, the Indian people have shown that they can be relied upon to  make sound and sensible decisions. I have every reason to believe that when the  time comes, our people will be discriminating enough to recognise the friendly  hand that alone can help our nation to move forward on the road to peace and  prosperity and preserve its unity and integrity.  [Interim-28th February, 1996]

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