Union Budget 2012-13 Summary

The Union Budget 2012-13 presented by the Finance Minister ShriPranab Mukherjee in LokSabha today identifies five objectives to be addressed effectively in the ensuing fiscal year.   They include focus on domestic demand driven growth recovery; create conditions for  rapid revival of high growth in private investment;  address  supply bottlenecks  in agriculture, energy and transport sectors  particularly in coal, power, national highways , railways and civil aviation; intervene decisively  to address the problem of malnutrition  especially in the 200 high-burden districts and  expedite coordinated implementation of decisions being taken to improve delivery systems , governance, and transparency;  and address the problem of black money and corruption in public life. 

ShriPranab Mukherjee said that India’s GDP growth in 2012-13 is expected to be 7.6 per cent +/-0.25 per cent.  He said that in 2011-12, India’s GDP is estimated to grow at 6.9 per cent after having grown at the rate of  8.4 per cent in each of the  two preceding years.  He said though the global crisis  had affected India, it still remains among  the front runners in economic growth.  Shri Mukherjee said the slowdown is primarily due to deceleration in industrial growth.  Stating that the headline inflation remained high for most part of the year, the Finance Minister expressed hope that it will moderate further in the next few months and remain stable thereafter.

            Shri Mukherjee laid emphasis on striking a balance between fiscal consolidation and strengthening macroeconomic fundamentals.  He announced introduction of amendments to the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act) as part of the Finance Bill 2012.  He said that concept of “Effective Revenue Deficit” and “Medium Term Expenditure Framework” statement are two important features of Amendment to FRBM Act in the direction of expenditure reforms.  This statement shall set forth a three year rolling targets for expenditure indicators.

            The Finance Minister called for a need to have a close look at the growth of revenue expenditure, particularly, on subsidies.  He announced that from 2012-13  while subsidies related to food and for administering the Food Security Act will be fully provided for,  all other subsidies would be funded to the extent that they can be borne by the economy without any adverse implications.  He said that the Government will endeavor to restrict the expenditure on central subsidies under 2 per cent of GDP in 2012-13and over the next three years, it would be further brought down to 1.75 per cent of GDP.Shri Mukherjee said that based on recommendations of the Task Force headed by ShriNandanNilekani, a mobile-based Fertilizer Management System has been designed to provide end-to-end information on movement of fertilizers and subsidies which will be rolled out nation-wide during 2012.  He said that transfer of subsidy to the retailer and eventually to the farmers will be implemented in subsequent phases which will benefit 12 crore farmer families. 

            On the tax reforms, the Finance Minister said that the  Direct Taxes Code (DTC) Bill will be enacted at the earliest after expeditious examination of the report of the Parliamentary  Standing Committee.  He said drafting of  model  legislation for Centre and State Goods and Services Tax (GST) in concert with States is under progress.  He added that the GST network will be set up as a  National Information Utility and will become operational by August 2012.

            On the disinvestment policy, Shri Mukherjee said that the Central Public Sector Enterprises (CPSEs) are being given a level playing field vis-à-vis private sector with regard to practices like buy-backs and  listing at stock exchange.  Stating that while in 2011-12, the Government will raise about Rs.14,000crore  from disinvestment as against a target of  Rs.40,000 crore,  the Finance Minister proposed to raise  Rs.30,000 crore through disinvestment in  2012-13.  He said at least 51 per cent ownership and management of CPSEs will remain with the Government.

            Calling for strengthening investment environment, Shri Mukherjee said that efforts are on to arrive at a broad-based consensus in respect of decision to allow FDI in multi-brand retail up to 51 per cent.  He proposed to introduce a new scheme  called Rajiv Gandhi Equity Savings Scheme  to allow for income tax deduction of 50 per cent to new retail investors who invest up to  Rs.50,000 directly in equities and whose annual income is below Rs.10 lakh.  The scheme will have a lock-in period of 3 years.  Regarding capital markets, the Finance Minister  proposed to allow Qualified Foreign  Investors (QFIs) to access Indian Corporate Bond market.  He also  proposed simplifying  the process of Initial Public Offer  (IPO).

            ShriPranab Mukherjee said that the Government is committed to protect the financial health of  Public Sector Banks and Financial Institutions.    He proposed to provide Rs. 15,888 crore for capitalization of Public Sector Banks, Regional Rural Banks and other financial institutions  including NABARD.  He added that a Central Know Your Customer (KYC) depositary will be developed in 2012-13 to avoid multiplicity  of registration and data upkeep.

            The Finance Minister informed that out of 73,000 identified habitations that were to be covered under “Swabhimaan” campaign for providing banking facilities by March 2012, about 70,000 habitations have been covered while the rest are likely to be covered by March 31, 2012.    He added that as a next step Ultra Small Branches are being set up at these habitations.  In 2012-13, Swabhimaan campaign will be extended to more habitations. 

            Emphasizing on infrastructure and industrial development, Shri Mukherjee said that during the 12^th Plan, infrastructure investment will go up to Rs.50 lakh crorewith  half of this expected from private sector.  Stating  that in 2011-12 tax free bonds for Rs.30,000 crore were announced for financing infrastructure projects, he proposed to double it to raise Rs.60,000 crore in 2012-13.  The Minister proposed to allow External Commercial Borrowings (ECB) to part finance Rupee debt of existing power projects. 

            The Finance Minister ShriPranab Mukherjee announced a  target of covering  8,800 km. under NHDP next year and increase in allocation of the Road Transport and Highways Ministry  by   14 per cent to Rs.25,360 crore in 2012-13.  He proposed to permit ECB for working capital requirements of the Airline Industry for a period of one year, subject to a total ceiling  of US dollar  1 billion to address the immediate financial concerns of the Civil Aviation Sector.   He added that a proposal  to allow foreign airlines to participate up to  49 per cent in the equity  of an air transport undertaking is under active consideration.

            Expressing concern over shortage in housing sector, the Finance Minister proposed  various measures to address the shortage of housing for low income groups in major cities and towns including ECB for low cost housing projects and setting up of a Credit Guarantee Trust Fund. 

            Regarding textile sector, the Finance Minister announced setting up of two more mega clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and other for Godda and neighboring districts in Jharkhand in addition to 4 mega handloom clusters already operationalized.  He also proposed setting up of three Weavers Service Centres, one each in Mizoram, Nagaland and Jharkhand.  The Minister proposed  aRs. 500 crore pilot scheme in twelfth plan for promotion and application of Geo-textiles in the North East.   A powerloom Mega Cluster  will be set up in  Ichalkaranji in Maharashtra.

            The Finance Minister proposed to set up a Rs.5000 croreIndia  Opportunities Venture Fund with SIDBI to enhance availability of equity to Micro, Small and Medium Enterprises. 

            Stating that agriculture will continue to be a priority for Government,  Shri Mukherjee proposed  an increase  by 18 per cent to Rs. 20,208 crore in the total Plan Outlay for the Department of Agriculture and Cooperation in 2012-13.  He said that the outlay for RashtriyaKrishiVikasYojana (RKVY) is being increased to  Rs. 9217 crore in 2012-13. 

            Underlining importance of timely access to affordable credit for farmers, the Finance Minister proposed to raise the target for  agricultural credit to Rs.5,75,000 crore, which represents an increase of Rs. 1,00,000 crore over the target for the current year..   He said that a short term RRB Credit  Refinance Fund is being set up to enhance the capacity of Regional Rural Banks to disburse short term crop loans to the small and marginal farmers.  He added that Kisan Credit Card Scheme will be modified to make it a smart card which can be used at ATMs.

            The Financed Minister said that in order to have a better out reach of the food processing sector, a new centrally sponsored scheme titled National Mission on Food Processing will be started in cooperation with the States in 2012-13. 

            The Finance Minister proposed an increase of 18 per cent to  Rs.37,113crore for Scheduled Castes Sub Plan and  an increase of 17.6 per cent to Rs.21,710 crore for Tribal Sub Plan during 2012-13. 

            Regarding food security, Shri Mukherjee said that National Food Security Bill 2011 is before Parliamentary Standing Committee.   He said a multi-sectoralprogramme to address maternal and child malnutrition in selected 200 high burdened districts is being rolled out during 2012-13.  He further  said that an allocation of Rs.15,850 crore has been made for ICDS scheme which is an increase of 58% and Rs.11,937 crore for  National Programme of Mid-Day Meals in schools for the year 2012-13.  He added that an allocation of Rs.750 crore is proposed for Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA. 

            The allocation for rural drinking water and sanitation is proposed to be increased by over 27 per cent to Rs. 14,000 crore and for PradhanMantri Road SadakYojana by 20 per cent to Rs. 24,000 crore in 2012-13.  He proposed to enhance the allocation under Rural Infrastructure Development Fund to  Rs. 20,000 crore with  Rs.5,000 crore exclusively earmarked for .creating warehousing facilities.

            The Finance Minister proposed an  increase in  allocation by 21.7 per cent  for Right to Education – SarvaShikshaAbhiyan to Rs.25,555 crore and by 29 per cent  for RashtriyaMadhyamikShikshaAbhiyan to Rs. 3,124 crore,   He proposed to set up a Credit Guarantee Fund to ensure better flow of funds to students.

            Regarding health sector  he proposed an increase in allocation for NRHM to Rs.20,822 crore in 2012-13.  He also said that National Urban Health Mission is being launched.

            The Finance Minister said that Mahatma Gandhi National Rural Employment Guarantee Scheme has had a positive impact.  He proposed an allocation of Rs.3915 crore for National Rural Livelihood Mission (NRLM) which represents an increase  of 34 per cent. He proposed to provide Rs.200 crore to enlarge the corpus to Rs.300 crore of the Women’s SHG’s Development Fund.  He said the fund will also support the objectives of  Aajeevika i.e.  NRLM and will empower  women  SHGs to access bank credit. He also proposed to establish a Bharat Livelihoods Foundation of India through Aajeevika which will support and scale up civil society initiatives and interventions particularly in the tribal regions covering around 170 districts.

            Allocation under National Social Assistance Programme (NSAP) is proposed to be raised by 37 per cent to Rs. 8447 crore.  Under the Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, the monthly pension amount per person is being raised from Rs. 200 to Rs.300.

            The Finance Minister announced a provision of Rs.1,93,407crore for Defence Services including Rs.79,579 crore for capital expenditure.  He said the allocation is based on present needs and any further requirement would be met.

           

Addressing Governance related issues, Shri Mukherjee said adequate funds are proposed to be allocated to complete enrolments of another 40 crore persons under UID Mission. Outlining the steps taken by the Government to address the issue of black money, the Minister proposed to lay a White Paper  on Black Money in the  current session of Parliament.

In the Budget Estimates for 2012-13, the Gross Tax Receipts are estimated at Rs.10, 77,612 crore which is an increase of 15.6 per cent over the Budget Estimates and 19.5 per cent over the revised estimates for 2011-12.  After devolution to States, the net tax to the Centre in 2012-13 is estimated at Rs. 7,71,071crore.  The Non Tax Revenue Receipts are estimated at Rs.1,64,614crore and Non-debt Capital Receipts  at Rs.41,650 crore.  The total expenditure for 2012-13 is budgeted  at Rs.14,90,925 crore.  Of this Rs.5,21,025crore is the Plan Expenditure while Rs.9,69,900 crore is budgeted as Non Plan Expenditure.

            The tax proposals are guided by the need to move towards the Direct Tax Code(DTC) in the case of direct taxes and Goods & Services Tax (GST) in the case of indirect taxes.

            Individual income upto Rs.2 lakh will be  free from income tax; income upto Rs.1.8 lakh was exempt in 2011-12.  Income above  Rs.5 lakh and upto Rs.10 lakh now carries tax at the rate of 20 per cent; the 20% tax slab was from Rs.5 lakh to Rs.8 lakh in 2011-12.  A deduction of upto Rs.10,000 is now available for interest from savings bank accounts. Within the existing limit for deduction allowed for health insurance, a deduction of upto  Rs.5000 is being allowed for preventive health check-up.  Senior citizens not having income from business will now not need to pay advance tax.

            While no changes have been made in corporate taxes, the budget proposes a number of measures  to promote investment in specific sectors.  In order to provide low cost funds  to some stressed infrastructure sectors, withholding tax on interest payments on external borrowings (ECBs) is being reduced from 20 percent to 5 per cent for 3 years.  These sectors are - power, airlines, roads and bridges, ports and shipyards, affordable housing, fertilizer, and dam.

            Investment linked deduction of capital expenditure in some businesses is proposed to be provided at 150 per cent as against the current rate of 100 per cent.  These sectors include cold chain facility, warehouses  forstoring food-grains, hospitals, fertilizers and affordable housing.   Bee keeping, container  freight and warehousing  for storage of sugar will now also be eligible for investment linked deduction.  

The budget also proposes weighted deduction for R&D expenditure, agri-extension services and expenditure on skill development in the manufacturing sector.

            For small and medium enterprises (SMEs) the turnover limit for compulsory tax audit of accounts as well as for presumptive taxation is proposed to be raised from Rs. 60 lakh to Rs. 1 crore. In order to augment funds for SMEs,  sale of residential property will be exempt from capital  gains tax, if the proceeds are used for purchase of plant and machinery, etc. 

            A General Anti-Avoidance Rule (GAAR) is being introduced in order to counter aggressive tax avoidance. Securities transaction tax (STT) is being reduced by 20 per cent on cash delivery transactions, from 0.125% to 0.1%.  Alternative Minimum Tax is proposed to be levied from all persons, other than companies, claiming profit linked deductions.

            The Finance Minister has  proposed a series of measures to deter the generation and use of unaccounted money. In the case of assets held abroad, compulsory reporting is being introduced and assessment upto 16 years will now be allowed to be re-opened.  Tax will be collected at source on trading in coal, lignite and iron ore; purchase of bullion or jewellery above Rs. 2 lakh in cash; and transfer of immovable property (other than agricultural land) above a specified threshold.  Unexplained money, credits, investments, expenditures etc. will be taxed at the highest rate of 30 per cent irrespective of the slab of income.

            The Finance Minister has made an effort to widen the service tax base, strengthen its enforcement and bring it as close as possible to the central excise. A common simplified registration form and a common return are being introduced for central excise and service tax.

            All services will now attract service tax, except those in the negative list.  The negative list  has 17 heads and includes  specified services provided by the government or local authorities, and services in the fields of education, renting of residential dwellings, entertainment and amusement,   public transportation, agriculture and animal husbandry.  A number of other services including health care, and services provided by charities, independent journalist, sport persons, performing artists in folk and classical arts, etc are exempt from service tax.  Film industry also gets tax exemption on copyrights relating to recording of cinematographic films.

Service tax rate is being increased from 10 per cent to 12 per cent, with consequential change in rates for services that have individual tax rates. The standard rate of excise duty for non-petroleum goods is also being raised from 10 per cent to 12 per cent. No change is proposed in peak rate of customs duty of 10 per cent on non-agricultural goods.

The Budget offers relief to different sectors of economy, especially those under stress.  Import of equipment for fertilizer projects are being fully exempted from basic customs duty of 5 per cent for 3 years.  Basic customs duty is also being lowered for a number of equipment used in agriculture and related areas.  

In the realm of infrastructure, customs relief is being given to power, coal and railways sectors.  While steam coal gets full customs duty exemption for 2 years (with the concessional counter-veiling duty of 1 per cent), natural gas, LNG and certain uranium fuel get full duty exemption this year.  Different levels of duty concessions are being provided to help mining, railways, roads, civil aviation, manufacturing, health and nutrition and environment.  So as to help modernization of the textile industry, a number of equipment are being fully exempted from basic customs duty, and lower customs duty is being proposed for some other items used by the textile industry. 

Customs duty is being raised for gold bars and coins of certain categories, platinum and gold ore.  Customs duty  is to be imposed on coloured gem stones.  Excise duty on certain categories of cigarettes and bidis, pan masala and chewing tobacco is being increased.  Customs duty is being increased  on completely built large cars/ SUVs/ MUVs of value exceeding $40,000. 

Silver jewellery will now be fully exempt from excise duty. Unbranded  precious metal jewellery will attract excise duty on the lines of branded jewellery. Operations are being simplified and measures taken to minimize impact of this provision on small artisans and goldsmiths.

While direct tax proposals in the Budget will result in a net revenue loss of Rs.4,500crore, indirect taxes will result in a net revenue gain of Rs.45,940 crore.  Thus, the tax proposals will lead to a net gain of Rs.41,440crore. 

Union Budget 2012-13 Highlights

·         Budget identifies five objectives relating to  growth recovery, private investment, supply bottlenecks, malnutrition and governance matters

·         GDP growth to be 7.6 per cent (+ 0.25 percent) during 2012-13

·         Amendment to the FRBM Act proposed  as part of Finance Bill.  New concepts of “Effective Revenue Deficit” and “Medium Term Expenditure Framework” introduced

·         Central subsidies to be kept under 2 per cent of GDP; to be further brought down to 1.75 per cent of GDP over the next 3 years.

·         Proposed: Mobile based fertilizer management system; LPG transparency portal; scaling up and rolling out of Aadhar enabled payment for government schemes in at least 50 districts.

·         Rs. 30,000 crore to be raised through disinvestment

·         Efforts to reach broadbased consensus on FDI in multi-brand retail

·         Rajiv Gandhi Equity Saving Scheme: to allow income tax deduction to retail investors on  investing in equities

·         Rs. 15,888 crore to be provided for capitalization of public sector banks and financial  institutions

·         A central  “Know Your Customer” depository to be developed

·         Swabhimaan: remaining habitations to be covered; to be extended to more habitations; ultra small branches to be set up in Swabhimaan habitations

·         Investment in 12^th Plan in infrastructure to go uptoRs. 50,00,000 crore; half of this is expected from private sector

·         Tax Free Bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects

·         Allocation of Road Transport and Highways Ministry enhanced by 14 per cent to Rs. 25,360 crore

·         Financial package of Rs. 3,884 crore for waiver of loans to handloom weavers and their cooperative societies; mega handloom clusters in Andhra, Jharkhand; weaver service centres in Mizoram, Nagaland and Jharkhand ; powerloom mega cluster in Maharashtra; Rs. 500 crore pilot schemes for geo-textiles in North-Eastern region

·         Rs. 5,000 crore India Opportunities Venture Fund to help small enterprises

·         Allocation to agriculture enhanced; RKVY gets Rs. 9,217 crore; BGREI gets Rs. 1,000 crore; Rs.2242 crore project to improve dairy productivity; Rs. 500 crore for coastal aquaculture

·         Various other agricultural activities merged into 5 missions

·         Target for agricultural credit raised to Rs. 5,75,000 crore

·         Interest subvention for short-term crop loans to farmers at 7 per cent interest continues; additional 3 per cent for prompt paying farmers

·         Rs. 200 crore for awards to incentivise agricultural research

·         Provisions under rural housing fund increased to Rs. 4,000 crore from Rs. 3,000 crore

·         Interest subvention of 1 percent on housing loans uptoRs. 15 lakh extended for one more year

·         AIBP allocation raised by 13 per cent to Rs. 14,242 crore

·         National Mission on Food Processing to be started in cooperation with State Governments

·         Scheduled Caste Sub Plan allocation increases by 18 per cent to Rs. 37,113 crore; Tribal Sub Plan by 17.6 per cent to Rs. 21,710 crore

·         Multi-sectoralprogramme to address maternal and child malnutrition in 200 high burden districts

·         58 per cent rise in allocation to ICDS, at Rs. 15,850 crore

·         Rural drinking water and sanitation gets 27 per cent rise in allocation to Rs. 14,000 crore; PMGSY gets 20 per cent rise to Rs. 24,000 crore

·         Projects covering length of 8800 km to be awarded under NHDP against 7,300 km during 2011-12

·         RTE-SSA gets Rs. 25,555 crore allocation, showing an increase of 21 per cent; 6000 schools to be set up at block level as model schools in the 12^th Plan; Credit Guarantee Fund to be set up for better flow of credit to students

·         National Urban Health Mission is being launched

·         34 per cent increase in allocation to National Rural Livelihood Mission, to Rs. 3915 crore

·         Rs. 1000 crore allocated for National Skill Development Fund

·         Bharat Livelihood Foundation to be established to support livelihood interventions particularly in  tribal areas

·         Widow pension and disability pension raised from Rs. 200 to Rs. 300 per month

·         Grant on death of primary breadwinner of a BPL family in the age group 18-64 years doubled to Rs. 20,000

·         Defence services get Rs. 193407 crore; any further requirement to be met

·         4000 residential quarters to be constructed for Central Armed Police Forces

·         UID-Aadhar to get adequate funds for enrolment of 40 crore persons, in addition to the 20 crore persons already enrolled

·         White Paper on Black Money to be laid in the current session of Parliament

·         Tax proposals mark progress in the direction of movement towards DTC and GST

·         Income tax exemption limit raised from Rs.1,80,000 to Rs.2,00,000; upper limit of 20 per cent tax slab raised from Rs.8 lakh to Rs.10 lakh

·         Interest from savings bank accounts deductible upto Rs.10,000; deduction of upto Rs.5,000 for preventive health check-up

·         Senior citizens without business income exempt from advance tax

·         Investment linked deduction of capital expenditure enhanced for certain businesses; new sectors eligible for investment linked deduction

·         Turnover limit for compulsory tax audit for SMEs raised from Rs.60 lakh to Rs.1 crore

·         STT on cash delivery reduced by 20 per cent to 0.1%

·         General Anti Avoidance Rule being introduced to counter aggressive tax avoidance

·         A number of measures proposed to deter generation and use of unaccounted money

·         All services to attract service tax except those in the negative list

·         Central Excise and Service Tax being harmonized

·         Standard rate of excise duty raised from 10 per cent to 12 per cent; service tax rates raised from 10 per cent to 12 per cent; no change in peak customs duty of 10 per cent on non-agricultural goods

·         Relief in indirect taxes to sectors under stress; agriculture, infrastructure, mining, railways, roads, civil aviation, manufacturing, health and nutrition, and environment get duty relief

·         Certain cigarettes and bidis attract higher excise duty; large cars attract higher customs duty

·         Excise imposed on unbranded jewellery also; measures to minimize impact on small artisans  and goldsmiths; branded silver jewellery exempted from excise duty

·         Net gain of Rs.41,440 crore due to taxation proposals

·         Total expenditure budgeted at Rs. 14,90,925 crore; plan expenditure at Rs. 5,21,025 crore – 18 per cent higher than 2011-12 budget; non plan expenditure at Rs. 9,69,900 crore

·         Fiscal deficit targeted at 5.1 per cent of GDP, as against 5.9 per cent in revised estimates for 2011-12

·         Central Government debt at 45.5 per cent of GDP as compared to Thirteenth Finance Commission target of 50.5 per cent

·         Medium-term Expenditure Framework Statement to be  introduced; will set forth 3-year rolling target for expenditure indicators

Rajiv Gandhi Equity Savings Scheme Launched

A new scheme called Rajiv Gandhi Equity Savings scheme is proposed in the Union Budget 2012-13 to encourage flow of saving in financial instruments and improve the depths of domestic capital market.

The Union Finance Minister ShriPranab Mukherjee in his Budget speech in LokSabha today said that the scheme allows for income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakhs. The scheme will have lock-in period of three years. The details will be announced in due course.

Budget Aims at Creating Enabling Atmosphere for All Sections

Presenting the Union Budget 2012-13 in the LokSabha , the Union Finance Minister ShriPranab Mukherjee has proposed to increase the duty-free baggage allowance for eligible passengers of Indian origin from Rs.25,000 to Rs. 35,000 and for children upto 10 years from Rs.12,000 to Rs.15,000. The baggage allowance was last revised in 2004.

The Finance Minister Shri Mukherjee said in his Budget Speech that the current year was a challenge for Indian economy but India has thrived under such challenges and will continue to do so. He said that the aim of his budget is to create an enabling atmosphere for corporates, farmers, entrepreneurs and workers to take initiatives for robust growth. He further said that the budget also aims to ensure that the benefits of growth reach all sections of population.

Health and Nutrition Gets Major Boost in the Budget 2012-13

The Union Finance Minister ShriPranab Mukherjee, while presenting the Union Budget for 2012-13, has proposed to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/ CVD to six specified life-saving drugs/ vaccines in this year’s budget. He proposed to reduce basic customs duty on soya protein concentrate and isolated soya protein to 10 per cent from the present 30 per cent or 15 per cent respectively. Basic customs duty and excise duty reduced on iodine from 6 per cent to 2.5 per cent. On probiotics, the basic customs duty is now 5 per cent reduced from 10 per cent.

ECB for Working Capital Allowed in Civil Aviation

Presenting the General Budget 2012-13 in LokSabhatoday, the Union Finance Minister,  Pranab Mukherjee proposed permission of External Commercial Borrowings (ECB) for working capital requirement of the airline industry for one year subject to total ceiling of US $ 1 billion. The Finance Minister said that this was to address the immediate financing concerns of the Civil Aviation sector, which is facing financial crisis.

In order to reduce the cost of Aviation Turbine Fuel (ATF), which largely contributes to the high operating cost of the civil aviation sector, the Finance Minister stated that the Government has permitted direct import of ATF by Indian Carriers, as actual users.

Shri Mukherjee informed that a proposal to allow 49% equity participation by foreign airlines engaged in operation of scheduled in non-scheduled air transport services is under active consideration of the Government.

Highlights of Economic Survey 2011-12

Following are the highlights of Economic Survey 2011-12:

1. Rate of growth estimated to be 6.9%. Outlook for growth and stability is promising with real GDP growth expected to pick up to 7.6% in 2012-13 and 8.6% in 2013-14.

2. Agriculture and Services sectors continue to perform well. 2.5 % growth in Agro sector forecast. Services sector grows by 9.4 %, its share in GDP goes up to 59%.

3. Industrial growth pegged at 4-5 percent, expected to improve as economic recovery resumes.

4. Inflation on WPI was high but showed clear slow down by the year-end; this is likely to spur investment activities leading to positive impact on growth.

5. WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012; calibrated steps initiated to rein-in inflation on top priority.

6. India remains among the fastest growing economies of the world. Country’s sovereign credit rating rose by a substantial 2.98 percent in 2007-12.

7. Fiscal consolidation on track - savings & capital formation expected to rise.

8. Exports grew @ 40.5% in the first half of this fiscal and imports grew by 30.4%. Foreign trade performance to remain a key driver of growth. Forex reserves enhanced - covering nearly the entire external debt stock.

9. Central spending on social services goes up to 18.5% this fiscal from 13.4% in 2006-07.

10. MNREGA coverage increases to 5.49 crore households in 2010-11.

11. Sustainable development and climate change concerns on high priority.

Economic Survey Pegs Industrial Growth at 4-5% in the Current Financial Year

The Economic Survey 2011-12 tabled in the Lok Sabha ON mARCH 15 by the Finance Minister, Shri Pranab Mukherjee has projected the industrial-sector growth during the current financial year to be between 4 to 5%. At this rate, says the Survey the annual growth rate will be less than the annual growth rates achieved in the recent past and far below the potential growth rate.

The Survey has said that the challenge for the sector in the short term would be to shore up of business sentiments, spur investment in productive activities and identify bottlenecks that can be removed in a reasonably short period of time. With the easing of headline inflation, moderation in commodities prices in the international market, and revival of manufacturing performance in recent months in the major economies, India’s industrial sector is expected to rebound during the next financial year.

According to the Survey, the long term average annual growth of industries comprising mining, manufacturing and electricity has in general remained aligned with the overall GDP growth rate during the post reform period between 1991-92 and 2011-12, averaging 6.7% as against GDP growth of 6.9%. The share of industry (including construction) and manufacturing in GDP remained generally stable at 28% and in the 14-16% range respectively during this period. The share of industry in total employment, however, increase from 16.2% in 1999-2000 to 21.9% in 2009-10 largely on account of expansion of employment opportunity in the construction sector from 17.5 million in 1999-2000 to 44.2 million in 2009-10.

The Survey has highlighted that the industrial growth, measures in terms of Index of Industrial Production (IIP) during April-December 2011 reached 3.6% compared to a growth of 8.3% in the corresponding period of previous year. There was a contraction in production in the mining sector, particularly in the coal and natural gas segments. The electricity sector witnessed and improvement in its growth in the current year. Growth also moderated in the manufacturing sector from 9.0% in April-December 2010 to 3.9% in April-December 2011. The Survey also points out that the basic goods and non-durables goods had a relatively better growth at 6.1% compared to the growth in the corresponding period of previous year. There was a moderation in growth in other segments of IIP and negative growth was observed in capital goods and intermediates segments.

As per the Economic Survey 2011-12, the share of Gross Capital Formation (GCF) in industry as percent to the overall GCF, after peaking to a level of 54.9% in 2007-08, moderated to 48.3% in 2010-11 the manufacturing GCF growth rate declined to 7% in 2010-11 from 42% in 2009-10. In the current year, the rate of growth of banking sector credit flow to industries moderated significantly. On year-on-year basis, credit growth to industry decelerated to 19.8% in December 2011 from 31.6% in December 2010. Moderation in rate of growth of credit was particularly large for the infrastructure and manufacturing sectors.

The Survey has stated that in medium to long term several challenges remains for the sector. The Planning Commission has projected growth rates of 9.8% and 11.5% in manufacturing sector required to achieve 9 % and 9.5% economy growth respectively. Commenting on the National Manufacturing Policy (NMP) which has envisaged even higher growth of 14% per annum so as to take the share of manufacturing in GDP to 25% and increase the absorption of labour in this sector from 50 million as of today to more than 150 million by 2022. The Survey notes that to achieve this policy objectives, several policy measures will have to be pursued simultaneously such as resolving issues of land availability and infrastructure for the proposed national investment and manufacturing zones (NIMZs); strengthening backward and forward linkages of manufacturing sector with agriculture and services sectors respectively; acquiring depth in manufacturing sector by focusing on high value addition industries; and prompting FDI to fill the saving-investment gap etc.

Achievements in Some Infrastrucutre Sector ‘Remarkable’

The Economic Survey 2011-12 tabled in Lok Sabha today by the Finance Minister Shri Pranab Mukherjee, says that the overall performance in creation of infrastructure in physical terms, in some sectors, during Eleventh Five Year Plan, have been remarkable as compared to the previous Five Year Plan, though there have been slippages in some sectors. The success in garnering private sector investment in infrastructure through the public-private partnership (PPP) route during the Plan has laid solid foundation for a substantial step in private-sector funding in coming years. PPPs are expected to augment resource availability as well as improve the efficiency of infrastructure service delivery. The Planning Commission has projected an investment requirement of over Rs. 45 lakh crore (about US $ 1 trillion) during the Twelfth Plan (2012-12). It is projected that at least 50% of this investment will come from the private sector as against the 36% anticipated in the Eleventh Plan and public sector investment will need to increase to over Rs.22.5 lakh crore as against an expenditure of Rs. 13.1 lakh crore during the Eleventh Plan. Financing infrastructure will, therefore, be a big challenge in the coming year and will require some innovative ideas and new models of financing, says the Survey.

The Survey has pointed out that the performance of broad sectors and sub sectors in key infrastructure areas in the current year presents a mixed picture. There was improvement in growth in power, petroleum refinery, cement, railway freight traffic, passenger handled at domestic terminals and upgradation of NHAI. Coal, Natural Gas, Fertilizers, handling of Export Cargo at airports and number of cell phone connections show negative growth. Steel sector witnessed moderation in growth.

According to the Survey, the performance in core and infrastructure sector is still to a large extent dependent in public sector projects the flash report for the month of October 2011 tracks the progress report of 583 projects in different sectors of which-only 7 are a head of schedule, 166 are on schedule, 235 are delayed and remaining 175 projects have been sanctioned without specifying any commissioning schedule. This has implied of cost over run of 15.3%. The Survey says that such delays increase project risk and cost, and could be minimized.

As per to the Survey, credit growth to the infrastructure sector turned negative in the current financial year. The incremental credit flow to the infrastructure sector during April-December 2011 was nearly 61% of the credit to this sector during April-December 2010. A significant reduction in credit flow was observed for the power and telecom sectors. The total FDI inflows into majors infrastructure sectors during April-December 2011 however, registered a growth of 23.6% as compared to the FDI inflows during April-December 2010. Power (43.6%), Non Conventional Energy (338 %) and Telecommunications (499%) were the preferred sectors for foreign investors. Other sectors, however, failed to share the buoyancy in FDI inflows.

The Survey has commented that in the coming years, financing of infrastructure also need to consider the plateauing of the domestic savings and macro availability of resources. There is need for introducing more innovative schemes to attract large-scale investment into infrastructure. In view of the massive requirements of funds, all efforts need to be made to attract big ticket long-term investors such as strategic investor, private equity funds, pension funds, and sovereign funds. Strengthening domestic financial institutions and development of a long-term bonds market may be critical. Besides financing, the infrastructure sector has also suffered due to a time lag in physical capacity creation and time over-run. These not only delay availability, but also raise pricing and affordability issues. Infrastructure costs as these are often non-tradable may also affect competitiveness of economy in long run. The Survey has stated that a harmonized list of main sectors and sub-sectors of infrastructure approved by the Government to serve as a guide for all agencies responsible for supporting infrastructure, is a welcome move.

Options to Ensure Price Stability in Food Items – Economic Survey

According to Economic Survey 2011-12, compositional shift in food basket of common household has increased demand of some food items. There are some constraints also in supply side which have been exposed during the recent episode of inflation in vegetables and fruits The Economic Survey has suggested following options to address these constraints.

• Extension programmes and guidance to farmers regarding fertiliser and insecticide uses an alternate cropping pattern based on soil analysis could be undertaken and intensified.

• As a strategy, regular imports of agriculture commodities in relatively smaller quantities with an upper ceiling on total quantity could be considered. The upper ceiling can be decided annually, relatively well in advance, after assessing the likely domestic situation in terms of production and consumption requirements.

• Setting up special markets for special crops in states/regions/areas producing those crops would facilitate supply of superior commodities to the consumers.

• Improved Mandi governance is an area of concern. A greater number of traders must be allowed as agents in mandis. Anyone who gets better prices and terms outside the Agricultural Produce Marketing Committee (APMC) or its farmgate should be allowed to do so.

• For promoting interstate trade, a commodity for which market fee has been paid once must not be subjected to subsequent market fee in other markets including that for transaction in other states. Only user charges linked to services provided may be levied for subsequent transactions.

• Perishable food items could be taken out of ambit of the APMC Act. The Government regulatory mandis sometimes prevent retailers from integrating their enterprises with those of farmers. In view of this perishable may have to be exempted from this regulation.

• Considering significant investment gaps in post harvest infrastructure of agriculture produce, organised trade and agriculture should be encouraged and the FDI in multi brand retain once implemented could be effectively leveraged towards this end.

• The Government should step up creation of modern stories facilities for food grains.

Government Takes Calibrated Steps to Rein in Inflation

The Economic Survey 2011-12 suggests policies to put India on a surer footing for sustained, inclusive growth and all-round development. The Survey takes note of the Government fighting malaise of inflation with numerous calibrated steps which constituted a combination of policies to improve supply, especially of food and basic agricultural products and curb fiscal and revenue deficits. Independently, the Reserve Bank of India tightened the monetary policy. While the battle against inflation had some slowing down effect on growth, there were no signs of major long-tem damage or rise in unemployment. The Government thus is in a position to turn its attention more exclusively to inclusive growth, notes the Survey. The Survey recommends that Government’s primary concern now has to be to advance the economy’s productivity and improve income distribution.

The fiscal year 2011-12 saw several initiatives to improve agricultural productivity and management of supply chains which have yielded results and contributed to containment of food price inflation. Deregulation of savings bank interest rates since October 2011 have contributed to control the Wholesale Price Index (WPI) inflation rate. The Survey suggests that rapid fiscal consolidation is the only way out to keep inflation down and aim for robust growth. “The principle way in which this has to be achieved is by raising our tax-GDP ratio and cutting down wasteful expenditures”, says the Survey. The centre’s gross tax-GDP ratio (BE 2011-12) stood at 10.5 per cent. “Our aim must be to cross 13 per cent by 2016-17” adds the Survey. The Economic Survey 2011-12 also notes that critical task of inclusion cannot be left to the free market. For Government the role has to be that of enabler, the Survey reiterates

According to the Economic Survey 2011-12 the growth rate is expected to pick up from the second quarter of 2012-13. “We expect growth in 2012-13 to be 7.6 (+/-0.25) per cent” says the Survey. The Survey also projects “ in 2013-14 it is expected that there will be further recovery for India and the nation will virtually be on the growth path it was on before the global recession of 2008”. The major drivers of growth – the savings and investment rates as percentage of GDP – after showing a down turn in 2011-12 will rebound quickly as India consolidates fiscally and continues to rise slowly thereafter as the ratio of India’s working age population to overall population rises because of the demographic dividend.

On the issue of ‘comparative rating index for sovereigns’ (CRIS), the Economic Survey 2011-12 notes that India’s CRIS has seen a rise from 23.81 in 2007 to 24.52 in 2012. Since the CRIS is a comparative rating score, it means that vis-à-vis the rest of the world, India’s rating has risen by 2.8 per cent says the Survey. The changing profile of CRIS score across the world tells a major story about the changing map of the world economy in which emerging economies are moving into centre stage and becoming drivers of the global economy, notes the Survey.

With respect to investment in infrastructure sector, the Survey points out that Planning Commission has talked about a target of one trillion dollars of infrastructural investment during the Twelfth Five-Year Plan with about half of this being raised from the private sector.

The Economic Survey 2011-12 recommends contracts as central driver of modern economy. It also sees benefits of transparent pricing formula over price control. The Survey also says that land acquisition issues are vital for India’s manufacturing and industrial sector. “Keeping in mind the incentive structure in markets, the government’s aim must be to create a level playing field, provide the essential infrastructural facilities and a non-interfering bureaucracy and then enable the industrial sector to flourish on its own” recommends the Survey.

Indian Economy Holds out Despite Global Uncertainty

The big story of the last decade for India has been its arrival on the global scene and there was no looking back from the first years of the first decade of the 21st Century. The Economic Survey 2011-12 tabled by the Finance Minister, Shri Pranab Mukherjee in the Lok Sabha today outlined the state of global economy and India’s position therein. The Survey has charted out not only the new opportunities but also the new challenges and responsibilities that India faces in the current global economic scenario.

The Survey observes that, as per the IMF, at a growth rate of 7 per cent, India is projected to be the second fastest growing major economy after China. The share of India in global merchandise exports has increased from about 0.5 per cent in 1990 to 1.5 per cent in 2010. Moreover, the extent of financial integration, measured by flows of capital as a share of GDP has also increased dramatically and the role of India in the World Economy has commensurately expanded along with the other major members of emerging markets, which as a whole now account for one-half of world output.

The Economic Survey states that after the opening of the economy in the early 1990s, India has begun to appear as a player of significance in the global economy. The country’s exports have begun to climb, its foreign exchange reserves, which for decades had hovered around 5 billion dollars, have gone up exponentially after the economic reforms and in little more than a decade have risen to 300 billion dollars. Indian corporations that rarely ventured out of India are suddenly investing all over the world and some even in the industrialized countries.

Given its size and its profile in the global economy, India will inevitably need to play an active role at global level, not just in the efforts towards resolving the current crisis but also in influencing the goals for the global economy on overarching macroeconomic issues such as trade, capital flows, financial regulation, climate change and governance of global financial institutions. India, the Survey points out, is already too much a part of global economy and polity and the developments in the world will affect India deeply and what India does will affect the world. Therefore, the Survey advises, there is a need for India to engage with the world in terms of action and ideas.

Reflecting upon the state of global economy, the Economy Survey states that there is an apprehension that the process of global economic recovery that began after the financial crisis of 2008 is beginning to stall and the sovereign debt crisis in the Euro zone area may persist for a while. The lower global growth forecast by the IMF for most countries in 2012 reflects the repeated bouts of uncertainty. In the medium term, challenges for the global economy continue to emanate from the way the Euro zone crisis is addressed. The high deficits and debts in Japan and the US and slow growth in high income countries in general, have not been resolved. The looming risk to the global outlook is also on account of the geo-political tensions centered on Iran that could disrupt oil supply and result in a sharp increase in oil prices and even disrupt supply routes.

Volatility in capital flows resulting from the spillover affects of monetary policy choices and other uncertainties in the advanced financial markets further impacted exchange rates and made the task of macro-economic management difficult in many emerging economies. This has brought out a new dimension of globalization in the post-financial crisis world, where easy monetary policy in one set of countries may result in inflation elsewhere due to cross-border capital flows.

The changes in composition of the global economy suggest a perceptible shift in the global balance of output of goods, especially manufacturing. While services, in particular financial services, continue to be largely concentrated in advanced economies, a large share in world population, coupled with higher growth, implies that the EMEs (Emerging Market Economies) and developing countries will increasingly account for incremental growth in the global market for goods and services. Even if the emerging economies, including India, witnessed a slow growth in 2011, growth prospects of most of these economies remain robust in the medium to long run due to various factors such as demographics and size of the domestic market, apart from high rates of investment and savings.

While stating that India has begun to be a more open economy over the years and has moved up the ranks, the Economic Survey observes that it is still poorest among the G-20. While the country has an advantageous demographic dividend, its low spend on Research and Development and innovation, low energy intensity of GDP, 80 per cent dependence on imports for petroleum products, dependence on global markets for food security and a need for sustained investment are some of the areas which will have to be addressed for the country to emerge as a Strong Global Player.

Labour Bureau Survey Indicates Upward Trend in Employment Since July 2009 Maintained

On the employment front, the country has been able to withstand the adverse impact of the global crisis and generate employment since July, 2009. The Labour Bureau conducted twelve quarterly quick employment surveys to assess the impact of the economic slowdown on employment in India. These surveys indicate that the upward trend in employment since July 2009 has been maintained. This is stated in Economic Survey 2011-12, presented by the Finance Minister, Sh. Pranab Mukherjee, in the Lok Sabha today. The results for selected sectors i.e. textiles including apparel, leather, metals, automobiles, gems and jewellery, transport information technology (IT)/business process outsourcing (BPO) and handloom/powerloom are as follows:

1. Overall employment in September, 2011 over September, 2010 has increased by 9.11 lakh, with the highest increase recorded in IT/BPO (7.96 lakh) sector followed by 1.07 lakh in Metals, 0.71 lakh in Automobiles, 0.08 lakh in Gems & jewellery and 0.07 lakh in Leather industries during the period.

2. An upward trend in employment has been continuously observed since July 2009. During the quarter July to September 2011, employment has increased in respect of all sectors except Leather and Transport where there was a marginal fall. The overall employment has increased by 3.15 lakh during the quarter. At the sectoral level, the maximum increase of 2.04 lakh in employment during the period September, 2011 over June, 2011 was in IT/BPO sector, followed by increase of 0.42 lakh in Textiles including Apparels, 0.38 lakh in Metals, 0.22 lakh in Automobiles, 0.09 lakh in Handloom/Powerloom, 0.07 lakh in Gems & Jewellery.

3. In the export oriented units, the employment at the overall level has increased by 1.96 lakh whereas in the non-exporting units, it has increased by 1.16 lakh during the period September, 2011 over June, 2011.

4. Overall estimated employment in all selected sectors has experienced a net addition of 23.58 lakh during the period October, 2008 (first survey) to September, 2011 (twelfth survey).

The Economic Survey observes that employment growth in the organized sector, public and private combined, has increased by 1.9 % in 2010, which is lower than the annual growth for the previous year. The annual growth rate for the private sector was much higher than that for the public sector. However, in respect of both sectors, annual increase in employment had slowed down in 2010 vis-à-vis 2009. The share of women in organized-sector employment was 20.4 per cent in 2010 March end and has remained nearly constant in recent years.

Lower Carbon Sustainable Growth to be Central Element of 12th Plan

The Economic Survey 2011-12, presented in Parliament today, suggests to make lower carbon sustainable growth a central element of our Twelfth Five Year Plan commencing in April 2012. The Survey points out that India’s per capita CO2 emissions are much lower (1.52 CO2 tons) than those of the developed countries even if historical emissions are excluded. Nevertheless, India has already taken a number of actions on voluntary basis with own resources in pursuance of a sustainable development strategy. Like adoption of the National Action Plan on Climate Change (NAPCC) in 2008 which has both mitigation and adaptation measures an announcement of a domestic goal of reducing the emission intensity of its GDP by 20-25 per cent of the 2005 level by 2020 is a noteworthy measure.

A Chapter on Sustainable Development and Climate Change has been first time introduced in the annual Economic Survey. This new chapter reflects the growing challenges of sustainable development and climate change. Pressures on land, air, water, forests and loss of plant and animal habitant are growing. The Survey cautions that a warming planet is already causing adverse effects, such as more frequent extreme weather events. It comments that the science and evidence of climate change are compelling. Citing the Durban meeting in December 2011 which has set some directions for appropriate responses to climate change, the Survey hopes that the Earth Summit in Rio in June 2012 will take stock of sustainable development priorities globally. Taking an optimist view, the Survey hopes that the Twelfth Five Year Plan will be setting out India’s priorities for a sustainable and inclusive, lower carbon development path. It says, as a responsible and enlightened member of the international community, India showed flexibility along with other developing countries toward the success of the Durban Conference. Developed countries are expected to reciprocate the flexibility shown by G-77 countries and India at Durban.

Commending further India’s sensitivity to global concerns, the Survey says that India has done well on all such counts of stewardship over the past decades. It has followed a conscious path in response to the key environmental issues. Sustainable development in terms of environmental concerns has been a recurring theme in Indian policy and planning. Economic reforms since 1980s have accelerated growth and incomes. Social well-being has improved broadly, as measured by gains in life-expectancy. India has stepped up protection of its natural environment, such as its forests.

Outlining the challenges ahead, the Survey comments that the 2009 State of the Environment Report by the Ministry of Environment and Forests (MoEF) clubs the issues under five key main challenges faced by India, which are climate change, food security, water security, energy security and managing urbanization. Broad-based economic and social development is ultimately the answer for greater environmental sustainability. Economic pricing of energy and other resources will be a key to switching to more sustainable development path. New technologies will be crucial, mostly in the private sector. But social justice will also require stepped-up public spending on energy access and other elements, the Survey suggests.

Economic Survey Forecasts 2.5 Percent Growth for AGRO Sector

The higher levels of agricultural output and ample food stocks as on date and the levels of reservoir storage this year augur well for bringing down headline inflation in the next fiscal. It has been observed by the Economic Survey 2011-12 presented today by the Union Finance Minister Shri Pranab Mukherjee in the Parliament. However, the Survey expresses concern over the growth rate in agriculture sector which has fallen short of planned target inspite of record food grain production. During the current Five Year Plan it is estimated at 3.28 percent against the target of 4 percent. According to Survey, agriculture and allied sectors are estimated to achieve a growth rate of 2.5 percent during 2011-12. Agriculture including allied activities accounted for 13.9 percent of Gross Domestic Products (GDP) in 2011-12.

The successive high production levels boosted the stock position of foodgrains in the central pool and as on February 1, 2012 it was 55.2 million tonnes comprising 31.8 million tonnes of rice and 23.4 million tonnes of wheat. This is adequate for meeting the requirements under the targeted public distribution system (TPSD) and welfare schemes during the current financial year. The Survey says that as per the Second Advance Estimates, production of foodgrains during 2011-12 has been estimated at 250.42 million tonnes.

Expressing concern over decline in the area under food grains cultivation the Survey calls for speedy improvement in yield through adequate investment in research and development. Pooling of many land holdings may yield better results for which land laws for leasing with sufficient safeguards in place should be considered. Addressing infrastructure requirements in the agriculture sector, especially storage, communication, roads and market should be priority.

According to the Survey, the outlook for the next fiscal remains bright but given the rapidly rising levels of demand for food there is a need to consider some policy options to ensure brighter medium term outlook. These options could, inter alia, be regular imports of agricultural commodities in relatively smaller quantities with an upper ceiling on quantity should to be decided annually, relatively well in advance, after assessing the likely domestic situation in terms of production and consumption requirements. According to Survey, “improving mandi governance, promoting inter-state trade by eliminating multiple levies, taking perishables out of the ambit of the APMC Act, developing a ‘farm-to-fork’ retail supply system, and addressing the investment gaps related to post harvest infrastructure for agricultural produce including through FDI in multi-brand retail” may help in improving agriculture commodities management in the country.

Education: Reform Process Continues in 2011-12

In the primary education sector, the reforms initiated in 2010-11, continued during the year 2011-12. This is stated in Economic Survey 2011-12, presented by the Finance Minister, Sh. Pranab Mukherjee, in the Lok Sabha today. The expenditure on education as a proportion of GDP by General government has increased from 2.72 per cent in 2006-07 to 3.11 per cent in 2011-12 (BE).

As per the Survey, the Sarva Shiksha Abhiyan (SSA) norms have been revised to correspond with the provisions of the RTE Act including norms for sanctioning additional teacher posts, classrooms, teaching-learning equipment to enable states to move to an eight-year elementary education cycle, enhancement of academic support for better school supervision, and expansion of Kasturba Gandhi Balika Vidhyalaya (KGBVs). The National Council for Teacher Education (NCTE) has been notified as the academic authority for teacher qualifications. Also, a country wide campaign has been launched for raising public awareness about Right to Education (RTE) and to ensure all schools become RTE compliant. The number of out-of-school children has come down from 134.6 lakh in 2005 to 81.5 lakh in 2009 as per an independent study conducted by the SRI-IMRB.

The Survey states that as part of the National Mission in Education through ICT, content generation and connectivity along with provision for access devices for institutions and learners are the major components of the Mission. A major development during the year has been the launch of Aakash, the low cost access-cum-computing device that was launched on 5 October, 2011. Besides so far nearly 400 universities have been provided 1 Gbps connectivity or have been configured under the scheme and more than 14,000 colleges have also been provided VPN connectivity. Creation of e-content for 996 courses in Phase II in engineering, sciences, technology, humanities, and management has been undertaken by IIT Madras. The Consortium for Educational Communication (CEC) has been tasked with creation of e-content for 87 undergraduate subjects. More than 2000 e-journals and 55,000e-books from 297 publishers have been made available online under this programme.

The Survey points out some institutions like the IITs have, in order to promote innovation, created technology business incubation facilities in their campuses. These are providing to be focal points amongst students and faculty for working towards taking some of their applied research to the market through the creation of business models for the same. These efforts need to be expanded greatly (a) by scaling up the previously successful centres of such innovations, and (b) by creating many such centres across the higher technical institutions in the country.