He places budget in the context of uncertainty worldwide and high food inflation

Union Finance Minister Pranab Mukherjee maintained on Monday that the budget proposals were aimed at addressing the problem of high inflation while giving a push to economic reforms, though there were no “dramatic announcements.”

Speaking to journalists after presenting the budget for 2011-12 in the Lok Sabha, he sought to provide a rationale for his proposals and the environment in which he had to carry out the exercise. “I had to place the budget in a situation where there is uncertainty worldwide [and] high food inflation. Though in terms of percentage, it [inflation] has come down from 20.2 to 9.3 [per cent], but still it is [at an] unacceptable level.”

Mr. Mukherjee was quick to point out that the budget proposals also tried to signal reforms without any dramatic announcement. “I wanted to convey a strong signal towards reforms...reforms not in dramatic announcements but [by] addressing those issues [which can help to improve] governance and delivery.”

As for the measures put in place to tackle high inflation, Mr. Mukherjee said he tried to address the problem by allocating resources and including schemes to augment pulses and edible oil supply. “We have taken special programmes, about six to seven programmes, to be implemented under the Rashtriya Krishi Vikas Yojna. I have allocated resources, and schemes are being worked out for pulses, edible oil, providing fodder for the cattle, green revolution in eastern India…We have to remove the supply bottlenecks and, therefore, the agriculture response should be to improve the supply bottlenecks.”

On taxation, he said the use of information technology in dealing with issues of income tax would “bring [about] revolutionary changes in the tax compliance, tax administration.”

The budget, he said, sought to move ahead on the path of fiscal consolidation by keeping a check on expenditure and reducing fiscal deficit, which he proposed to bring down to 4.6 per cent of the gross domestic product in 2011-12 from 5.1 per cent in the current fiscal, as per the revised estimates. “I have conveyed the message in this budget that we shall have to resort to fiscal prudence, and fiscal consolidation should take place.”

Delay in GST

On the delay in the implementation of the Goods and Services Tax (GST) to revamp the indirect tax regime, Mr. Mukherjee said: “It would be possible [to implement it] with the cooperation of my colleagues in the States. We would be able to move towards GST… It is not just for a casual mention [in the budget]. We shall have to go to GST and we shall have to address the concerns of the States. I am not insensitive to the concerns of the States.”

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