Union Budget 2012: Pranab Mukherjee's full speech

New Delhi:  Today's Budget is one of the biggest challenges of Pranab Mukherjee's long political career and the Finance Minister set the tone for it when he described the year gone by as a "year of recovery interrupted." He began with listing grim ground realities - the global economic scenario, the battle with double digit inflation and said it was time for tough decisions. Here is the full speech delivered by Pranab Mukherjee in the Parliament today while presenting the financial budget.

Union Budget 2012: Finance Minister Pranab Mukherjee's full speech
Budget 2012 Pranab Mukherjee Speech

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Budget 2012: Is this Pranab Mukherjee's biggest challenge yet?

When Finance Minister Pranab Mukherjee rises to present the Union Budget tomorrow, he might as well be performing with the Cirque du Soleil.

Until now the United Progressive Alliance government’s go-to man for crises of all sorts, Mukherjee faces his most challenging balancing act tomorrow, hemmed in by a truculent ally, a fiscal situation that seems as broken as Humpty Dumpty, a central bank – headed, ironically, by a former finance secretary – that has just decided to wait and watch for a sign from Mukherjee, and an Economic Survey, released today, that only makes a half-hearted attempt to hide the warts.

Not to mention a newly-emboldened Opposition that has smelt blood after the Congress' poor showing in the recent Assembly elections in five states. 

It is truly Mukherjee’s perfect storm. And to weather it, he must, as the Economic Survey put it, “anchor fiscal consolidation on structural reforms in expenditure”.

Mukherjee’s troubles really started on Wednesday, when Dinesh Trivedi, Railway-Minister-in-limbo as it were, presented a portfolio budget that by most accounts was well-meaning. Instead, he was veering on the edge of political history only minutes later, when his own party disavowed his vision and demanded a rollback of the nominal fare hikes he had announced, and stoking speculation of an imminent collapse of the government.

On Thursday, Mukherjee faced two minor rumblings in the ground under his feet. First, the Reserve Bank of India decided that it would rather wait and watch Mukherjee before making any move to inject much-needed liquidity in the system.

Having cut the cash reserve ration only a week ago, the central bank left key policy rates untouched, meaning that industry will have to wait until April for any easing of the high interest rate regime. To be sure, the cycle has turned with the cuts in the cash reserve ratio, but advance tax payments mean that the liquidity crunch facing corporates will continue awhile.

This means that there will be no major investments by corporates until some time after April, depending on the quantum of the cut.

The worrying part for Mukherjee is that he can’t easily promise any tax hikes, given that corporates are already strapped for funds. Any tax increase will only hurt profitability, and the ability of corporates to make big-ticket investments or expansion that could boost growth and employment.

The lack of such initiatives will inevitably drag the larger economy down, since the public sector is ill-equipped, or funded, to provide any more sops or jobs. Any increase in social welfare spending to offset slow private sector slowdown is fraught with danger – it could send the government’s finances over the edge of the cliff. Already, Mukherjee is headed for a catastrophic increase in the fiscal deficit that has shot up by almost a full percentage point of the gross domestic product.

With gross fixed capital formation, or the value of assets acquired or sold in the fiscal, declining as a percentage of GDP from last year, there is little the government has to show by way of performance.

The Economic Survey, for all practical purposes, gave the government a clean report card, largely blaming global factors for the current situation, as it noted, “While a large part of the reason for the slowing of the Indian economy can be attributed to global factors, domestic factors also played role.” These, not surprisingly, were a tight monetary position due to high inflation. And slowing investment and industrial activity.

The link is clear – a loose monetary policy means higher spending and investment but also higher inflation , often in the form of food prices, the proverbial third rail of Indian politics.

And despite an above-7 per cent GDP growth projection for next year, the Survey doesn’t mince its words about the past fiscal's numbers: “... compared to how India has fared since 2003 and, especially, since 2005, they are disappointing." 

Can Mukherjee do better?  

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No problem in rollback of speech, says Pranab

New Delhi:  Injecting a note of levity in his sombre Budget presentation, a smiling Finance Minister Pranab Mukherjee told the Lok Sabha on Friday that he had no problem in a "rollback of the speech".

Mr Mukherjee, who had to interrupt his reading of the Budget because some members of the House could not hear it properly, offered to read some paragraphs again. "Rollback of the speech, no problem," Mr Mukherjee said, smiling broadly, as the house interrupted in laughter.

The reference was, of course, to the rail budget where United Progressive Alliance (UPA) ally Trinamool Congress has asked for a rollback of the hike in passenger tariff.

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SBI has no plans to lend more to Kingfisher Airlines: Pranab

State Bank of India has no plans to lend more to debt-laden carrier Kingfisher Airlines, Finance Minister Pranab Mukherjee said on Tuesday.

Kingfisher has cleared all its tax and interest dues up to August 2011, Mukherjee told lawmakers in a written reply.

Meanwhile, Kingfisher chief Vijay Mallya says pilots have been spoken to and the issue of delayed salaries is being sorted out.

Kingfisher Airlines, headed by liquor tycoon Vijay Mallya and named after his famous brand of Indian beer, has been struggling to continue its normal operations as a heavy debt load, higher jet fuel costs, stiff competition and low fares have severely hurt its ability to raise funds.

The airline, which has a debt of about $1.3 billion, needs at least $400 million soon to keep flying, according to the Centre for Asia Pacific Aviation, an industry consultancy.

"We are seeking help from the banking sector to de-freeze our accounts," Mallya added.

Kingfisher had posted losses of Rs 444 cr in the quarter that ended in December 2011. It has ben operating on a trruncated flight schedule after the Service Tax department froze its bank accounts due to non-payment of dues. Kingfisher Airlines has also been suspended from the IATA clearing house (ICH) for not paying its dues.

Additionally, the battered airline owes Rs 40 crore to the Central Board of Excise and Customs, which has threatened legal action if the airline does not pay on time. The CBEC has also frozen the airline’s bank accounts.

With inputs from PTI; Original content by Thomson Reuters 2012

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Rakhi Sawant visits Parliament with advice for Pranab and Ramdev

New Delhi:  Publicity queen Rakhi Sawant never misses an opportunity to hog the limelight. And she has done it again.

The actor was at Parliament at the start of the Budget Session. "No one invited me, I just came randomly, just to meet parliamentarians."

"I am here to know the Budget. I want to see how leaders are working," she said. "I want to request Sonia Gandhi that there should be something for the women too," she added.

Rakhi had some words of appreciation for the Finance Minister. "I have full confidence that Pranab Mukherjee would make a good Budget," she said.

She also had some words of advice for yoga guru Baba Ramdev. "I respect Baba Ramdev. He should do yoga and keep quiet."

Last year, Rakhi created a stir when she expressed her desire to marry Baba Ramdev. She also spoke about how she admired Rahul Gandhi.

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