THE ECONOMY : AN OVERVIEW
Corporation (IWRFC) proposed to be set up with initial capital of Rs.100 crore contributed
by the Central Government, to fund long-gestation major and medium irrigation projects.
National Horticulture Mission (NHM): NHM covering 340 districts in 18 States and two
Union Territories, provided Rs.1,100 crore in 2008-09.
Soil testing: 500 soil testing laboratories to be set up during the Eleventh Plan with
Government assistance of Rs.30 lakh per laboratory; one-time allocation of Rs.75 crore
to the Ministry of Agriculture in order to provide one fully-fitted mobile soil testing
laboratory each to 250 districts of the country.
Plantation Crops: Special Purpose Tea Fund for re-plantation and rejuvenation to be
provided Rs.40 crore in 2008-09; similar support to cardamom, rubber and coffee; crop
insurance scheme for tea, rubber, tobacco, chilli, ginger, turmeric, pepper and cardamom
to be introduced.
National Plant Protection Training Institute at Hyderabad to be converted and
upgraded into an autonomous National Institute of Plant Health Management.
Crop Insurance: National Agriculture Insurance Scheme (NAIS) to be continued in its
present form for Kharif and Rabi 2008-09. Rs.644 crore provided for the scheme.
Weather Based Crop Insurance Scheme implemented as a pilot scheme in selected
areas of five States to be continued; Rs.50 crore provided for this purpose in 2008-09.
Subsidy for Fertilizers: Government to continue to provide fertilisers to farmers at
subsidized prices; Proposals to move to a nutrient based subsidy regime and alternative
methods of delivery being examined.
Cooperative Credit Structure: Prof. Vaidyanathan Committee's report on reviving the
short-term cooperative credit structure under implementation in 17 states. Rs.1185 crore
has been released so far by the Central Government to four States. Central Government
and State Government have reached an agreement to implement the report on reviving
the long term cooperative credit structure. Central Government’s share will be Rs. 2,642
crore or 86 per cent of the total burden.
Scheme of Debt Waiver and Debt Relief for farmers:
o Scheme to cover all loans disbursed by scheduled commercial banks, regional
rural banks and cooperative credit institutions up to March 31, 2007 and overdue
as on December 31, 2007 are covered under the scheme;
o Complete waiver of all loans that were overdue on December 31, 2007 and
which remained unpaid until February 29, 2008 for marginal farmers and small
farmers;
o One time settlement (OTS) scheme in respect of other farmers for all loans that
were overdue on December 31, 2007 and which remained unpaid until February
29, 2008; Rebate of 25 per cent against payment of the balance of 75 per cent
under OTS;
o Agricultural loans restructured and rescheduled by banks in 2004 and 2006
through special packages also eligible, either for a waiver or an OTS on the
same pattern;
o Implementation of the debt waiver and debt relief scheme to be completed by
June 30, 2008; Farmers availing the relief would be entitled to fresh agricultural
loans from banks in accordance with normal rules.
o About 3 crore small and marginal farmers and about one crore other farmers to
benefit from the scheme; Total value of overdue loans being waived estimated at
Rs.50,000 crore and the OTS relief estimated at Rs.10,000 crore.
INVESTMENT, INFRASTRUCTURE, INDUSTRY AND TRADE
Saving rate and investment rate estimated to be 35.6 per cent and 36.3 per cent,
respectively, by the end of 2007-08; between April- December 2007-2008. FDI amounted
to US$ 12.7 billion and FII to US$ 18 billion.
Support to Central Public Sector Enterprises (CPSEs): Government to provide
Rs.16,436 crore as equity support and Rs.3,003 crore as loans to CPSEs in 2008- 09; 44
CPSEs listed as on date; Government policy is to list more CPSEs in order to unlock their
true value and improve corporate governance.
Rural Infrastructure Development Fund
Corpus of RIDF-XIV to be raised in 2008-09 to Rs.14,000 crore, with a separate window
for rural roads.
Manufacturing Sector
Growth in capital goods still very high at 20.2 per cent. Goal to take manufacturing
growth rate to double digit through more reforms.
Power
Against Eleventh Plan target for additional power generation capacity of 78,577 MW
Commercial Operation Date (COD) on about 10,000 MW to be achieved by end March
2008.
Ultra Mega Power Project (UMPP): Fourth UMPP at Tilaiya to be awarded shortly;
Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamilnadu urged to bring five more
UMPPs to the bidding stage by extending the required support.
Rajiv Gandhi Grameen Vidyutikaran Yojana to be continued during the Eleventh Plan
period with a capital subsidy of Rs.28,000 crore; allocation of Rs.5,500 crore for 2008-09.
Accelerated Power Development and Reforms Project: Rs.800 crore to be provided in
2008-09, A National Fund for transmission and distribution reform to be created.
Oil and Gas
Seventh round of bidding under the New Exploration Licensing Policy; bids invited for 57
exploration blocks; estimated to attract investment of the order of US$3.5 billion to US$8
billion for exploration and discovery.
Coal
53 coal blocks with reserves of 13,842 million tonnes allotted during April January 2007-
08 to Government and private sector companies; new Coal Distribution Policy notified in
October 2007; coal regulator to be appointed.
Information Technology
Allocation to the Department of Information Technology enhanced to Rs.1,680 crore in
2008-09 from Rs.1,500 crore in 2007-08; Two Schemes for establishing 100,000
broadband internet-enabled Common Service Centres in rural areas and State Wide
Area Networks (SWAN) with Central assistance under implementation; new scheme for
State Data Centres also approved; Rs.75 crore provided for the common service centres;
Rs.450 crore provided for SWAN and Rs.275 crore for the State Data Centres.
Micro, Small and Medium Enterprises
A risk capital fund being created in the Small Industries and Development Bank of India
(SIDBI); Credit Guarantee Trust with SIDBI had extended guarantees to 89,129 units for
an amount of Rs.2,479 crore as on January 31, 2008; SIDBI to reduce the guarantee fee
from 1.5 per cent to 1 per cent and the annual service fee from 0.75 per cent to 0.5 per
cent for loans up to Rs.5 lakhs.
Foreign Trade
Relief given to exporters in three tranches amounting to over Rs.8,000 crore; Interest
cost of sterilization through market stabilization bonds (MSS), which is in a sense,
subsidy to the export sector, estimated at Rs.8,351 crore for the year 2007-08.
FINANCIAL SECTOR
Financial Inclusion: Two recommendations of the Committee on Financial Inclusion
proposed to be accepted viz (i) to advise commercial banks, including RRBs, to add at
least 250 rural household accounts every year at each of their rural and semi-urban
branches; and (ii) to allow individuals such as retired bank officers, ex-servicemen etc to
be appointed as business facilitator or business correspondent or credit counselor; banks
to be encouraged to embrace concept of Total Financial Inclusion; Government to
request all scheduled commercial banks to follow the example set by some public sector
banks and meet the entire credit requirements of SHG members, namely, income
generation activities, social needs like housing, education, marriage etc., and debt
swapping.
o Fund of Rs.5,000 crore to be created in NABARD to enhance its refinance
operations to short term cooperative credit institutions;
o Two funds of Rs.2,000 crore each to be created in SIDBI - one for risk capital
financing and other for enhancing refinance capability to the MSME sector.
o Fund of Rs.1,200 crore to be created in NHB to enhance its refinance operations
in the rural housing sector.
These funds are to be governed by the general guidelines that are
now applicable to RIDF with some modifications.
Differential Rate of Interest (DRI) scheme: Borrower's eligibility criteria for loan under
the DRI scheme to the weaker sections of the community engaged in gainful occupations
enhanced.
Capital Markets
Measures to expand the market for corporate bonds: Exchange-traded currency and
interest rate futures to be launched and transparent credit derivatives market to be
developed with appropriate safeguards; Tradability of domestic convertible bonds to be
enhanced through the mechanism of enabling investors to separate the embedded equity
option from the convertible bond, and trade it separately; Development of a market-based
system for classifying financial instruments based on their complexity and implicit risks to
be encouraged.
Permanent Account Number (PAN): Requirement of PAN extended to all transactions
in the financial market subject to suitable threshold exemption limits.
National market for securities: Empowered Committee of State Finance Ministers to
be requested to work with the Central Government to create pan Indian market for
securities that will expand the market base and enhance the revenues of the State
Governments.
OTHER PROPOSALS
Skill Development Mission: A non-profit corporation to be established with the
entrusted mission to address the challenge of imparting the skills required by a growing
economy; Rs.15,000 crore proposed to be garnered as capital from Governments, public
and private sector, and bilateral/multilateral sources; Government's equity in the
proposed non-profit corporation to be Rs.1,000 crore to begin with.
Industrial Training Institutes: 238 ITIs being upgraded under the World Bank assisted
scheme; Under the PPP scheme, 309 ITIs have been identified in 29 States with
corresponding industry partners and agreements signed in 244 cases; Rs.750 crore set
apart in 2008-09 in anticipation of upgrading 300 more ITIs.
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