The Hindu Business Line : Reforms package for industry may continue — Budget to have special allocation for rural sector

THE contours of the Manmohan Singh Government's first full Budget that are emerging indicate that it will be a wholesome package addressing both the needs of a reforming economy and the neglect of the rural sector which led to a massive political upheaval last year.

According to sources close to the budget-making exercise, the Government will continue with the reforms package for industry so as to ensure that the economy achieves the eight per cent plus growth in the coming year. Therefore, large-scale customs and excise rationalisation, personal tax reforms, restructuring of the banking sector and policies facilitating greater flow of foreign direct investment will continue to be high priority.

For the rural economy and the traditional sectors, the Government intends to put money behind its announcements in order to impart credibility to the schemes that may be announced in the budget. Political sensibilities are also to be kept in the right focus and a substantial amount is likely to be set aside for the programmes included in the National Common Minimum Programme (NCMP) of the alliance Government.

According to available indications, the gross budgetary support (GBS) for the 2005-06 Budget would be in the region of Rs 1,74,000 crore out of which, Rs 1,02,000 crore would be for the Central sector. A big chunk of this — Rs 70,000 crore — would be earmarked specially for the NCMP schemes, though there are no plans as of now of expanding the scope of coverage beyond the employment guarantee scheme and the food-for-work programme in 150 identified districts of the country. For other sectors, there could be specific allocations.

Boost for rural electrification: In the power sector, the major thrust is likely to be on rural electrification, which would directly improve the lives of the rural population, apart from providing them some employment potential as well in terms of agro-industries. The plan, therefore, is to merge the on-going Accelerated Power Development and Reforms Programme (APDRP) with the rural electrification programmes and provide an allocation of about Rs 4,000 crore in the first year.

For agriculture, the Government's high priority is said to be irrigation and the thinking in official circles is to merge the existing irrigation and flood control schemes and provide Rs 5,000 crore for a new initiative to accelerate major irrigation programmes. Minor irrigation is to get a separate allocation of Rs 250 crore to Rs 300 crore. A horticulture mission is also likely which would create more rural employment.

Fusion of development programmes: There is also the possibility of a backward districts initiative in the budget with an allocation of about Rs 2,500 crore. This initiative will probably see the fusion of various ongoing `vikas yojanas' (development programmes) including the special allocations made in the past for the KBK (Kalahandi-Bolangir-Korapur) districts of Orissa and what is now called the `Bihar package.'

The textiles sector is expected to receive special attention through a technology upgradation fund.

This sector is receiving priority attention of the Government because global trade in clothing has just been opened up which promises big opportunities for Indian companies. The expansion of this sector is expected to create 12 lakh jobs in four years, thereby, partly addressing the unemployment problem.

e-governance allocation: A substantial allocation is also likely for furthering e-governance in the country and a Cabinet approval is expected shortly for a Rs 3,000-crore allocation for this programme. There are plans to expand this programme in the coming years with an overall expenditure of about Rs 12,000 crore spread over the next three to four years. A separate allocation of Rs 200 crore is also expected for a data processing network, which would see all the State capitals being electronically linked to New Delhi.

For infrastructure development, a special purpose vehicle with a corpus of Rs 10,000 crore is likely so as to activate a public-private initiative in the critical sectors.

Besides, funding for roads, ports and power is expected to be leveraged through a special initiative to involve a portion of the huge foreign exchange reserves of the country.

Sources associated with the broad outline of the coming budget suggest that if these initiatives materialise in the February 28 package, the Manmohan Singh Government could effectively claim to be both pro-industry and pro-rural economy.

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