State of Indian Economy & Budget Proposals 2012

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  • 1. State of Indian Economy & Budget Proposals 2012 By - Akash Jauhari
  • 2. Global Factors Effecting Indian Economy Geo Political tension in Middle East Slow Recovery in High Crude Oil US Prices Natural Calamities in Euro Zone Crisis Japan & ThailandThese Factors hamper the exports and Foreign Investments in India.
  • 3. Interconnection between Macro-economic Factors Demand Supply Mismatch Inflation Tight Monetary Policy/ High Interest Rates Reduced Investments & Consumptions Slowing Economy Waning Revenues for Govt. Fiscal DeficitsHence there is a conflict between the Monetary and Fiscal policies. One attempting to reduce inflation & liquidity while other trying to push growth.
  • 4. IIP NumbersComponent Performance FactorManufacturing Low to medium High interest rates, Decelerating Demand globallyMining Major Contraction Stringent Laws, Crackdown on Illegal MiningPower Medium to High Domestic Demand
  • 5. Fiscal Deficit target of 4.6% missed Disinvestment Increased Oil Target Missed Subsidies Stimulus/ Poor Revenue other Collection subsidies Inflation Key Factors responsible for continued Inflation:WPI CPI High Crude Oil Prices;9% 7% High Commodity, minerals and chemical prices; Depreciated Rupee; Supply Side Constraints
  • 6. Exports Imports Net Impact Exports Growing: Imports Growing: In absolute terms, trade deficit Petroleum, Engineering, Gems & High & Volatile Crud Oil prices. widening. Jewelry (high value added pdts) Balance of Payments for FY 2011-12 compared to previous year. FII’s down driven by Euro Slight improvement in Major Increase in Net Capital Inflows zone uncertainties FDI’s external borrowings Increased Capital Flows for FY 2011-12 compared to previous year.GDP FY 2011-12 FY 2012-13 (P) Widening Fiscal Deficit: Reduced Profitability of corporate due to high6.9 % 7.6% interest rate and high inflation has dented the Poor GDP figures for 2011-12 revenues for the Government. Proposed Food Security bill will further burden the government expenditure.
  • 7. Policy Proposals Infrastructure Agriculture Other Proposals• Greater participation of • Taking Green Revolution • Rs 30,000 crore to bePrivate Sector. to Eastern India. raised via dis-investment in 2012-13.• Govt. promoting PPP. • Kishan Credit Card Scheme. • National Food Security• Issuance of Tax free Bill in ParliamentaryInfra bonds & Infra Debt • Increase in Storage Standing Committee.bonds capacity. Financial Sector Environmental Manufacturing • Concession and exempt• Taking forward • Target of making for machinery &Legislative reforms in manufacturing as 25% of equipment for Solarfinance sector. GDP Thermal Plant.• KYC central Database • Creating 10 crore jobs • Promoting Energy Savingto be setup. in next decade devices.