Budget Watch: Indian FinMin presents budget

India's finance minister presented the 2011-2012 budget in a speech to parliament this morning, reports the Times of India.  

The finmin said credit flows to farmers will be raised from around $80 billion to around $100 billion and the allocation under another farm production boosting scheme will be raised from $1.5 billion in the current year to $1.75 billion.

An additional $66 million will be provided to promote pulses cultivation in rain-fed areas and another $66 million to promote farm product cultivation.

The FM announced that Direct Tax Code will be implemented from April, 2012 and the Goods and Services Tax Bill is to be introduced in Parliament this year.

According to MoneyControl.com, the FM also proposed to provide $1.33 billion for state-owned bank recapitalization. The speech drove the benchmark Sensex index of the Bombay Stock Exchange up some 250 points in early trading.

According to the Times of India, other highlights included:

GROWTH, INFLATION EXPECTATIONS
* Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent
* Inflation seen lower in the financial year 2011-12

DISINVESTMENT
* Disinvestment in 2011-12 seen at 400 billion rupees ($9 billion)

POLICY REFORMS
* To create infrastructure debt funds
* To boost infrastructure development with tax-free bonds of 300 billion rupees ($6.66 billion)
* Food security bill to be introduced this year
* To permit SEBI registered mutual funds to access subscriptions from foreign investments
* Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion
* Public debt bill to be introduced in parliament soon

CREDIT TO SECTORS
* Corpus of rural infrastructure development fund raised to 180 billion rupees ($4 billion) in 2011-12
* To provide 201.5 billion rupees ($4.5 billion) capital infusion in state-run banks in 2011-12

AGRICULTURE
* Removal of supply bottlenecks in the food sector will be in focus in 2011-12
* To raise target of credit flow to agriculture sector to 4.75 trillion rupees ($105 billion) 
* Gives 3 percent interest subsidy to farmers in 2011-12
* Cold storage chains to be given infrastructure status
* Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30 billion rupees ($666 million) in a phased manner
* To provide 3 billion rupees ($66 million) for 60,000 hectares under palm oil plantation
* Actively considering new fertiliser policy for urea

ON THE STATE OF THE ECONOMY
* "Fiscal consolidation has been impressive. This year has also seen significant progress in those critical institutional reforms that will pave the way for double digit growth in the near future."
* Food inflation remains a concern
* Current account deficit situation poses some concern
* Must ensure that private investment is sustained
* "The economy has shown remarkable resilience."

ON GOVERNANCE
* "Certain events in the past few months may have created an impression of drift in governance and a gap in public accountability … such an impression is misplaced."
* Corruption is a problem, must fight it collectively