Union Budget of India 2011-2012

The Finance Minister of India presented the national budget yesterday which took the markets by surprise. It shows his aggressive plans of bringing down the deficit, which has increased in last few years.

With this action, FM Pranab Mukherjee set aside the assertions made by critics that the country would be unsuccessful in restricting its budget deficit at 5.1 per cent of the GDP of 2011. Further, Mr. Mukherjee is even being burdened with political pressure for bringing up the social-welfare expenditure in order to aid his party in the state elections that are due for a later date this year.

However, in place of that, he is reining in the gross government expenditure in his 12.58 trillion-rupee ($277.89 billion) budget meant for the fiscal year starting on 1st April, mirroring a rise in the expenditure by 3.4 per cent from this ongoing year. According to the recent budgets, the expenditures have increased by as much as 20 per cent on a year-on-year basis.

Mr. Mukherjee is taking chances on significantly increased tax revenues to reduce this year's fiscal deficit to 5.1 per cent of the GDP, lower from a former target of 5.5 per cent. He set the target for next year's deficit at 4.6% of GDP, less than the 4.8% target for the current year.