New Delhi, Feb 17 (KNN) Delivering his Interim Budget Speech for 2014-15 the Union Finance Minister P Chidambaram said that Ministry of MSME has already created the 'India Inclusive Innovation Fund' to promote grass root innovations with social returns to support enterprises in the MSME sector with an initial contribution of Rs 100 crore to the corpus of the fund.
“Ministry of MSME will create the ‘India Inclusive Innovation Fund’ to promote grass root innovations with social returns to support enterprises in the MSME sector. I propose to make an initial contribution of Rs 100 crore to the corpus of the Fund,” he said.
Chidambaram today presented the interim budget for the fiscal year 2014-15 to cover expenditure until the government's term ends in May.
The National Innovation Council (NInC) and the Ministry of MSME in January announced the creation of the India Inclusive Innovation Fund.
The fund is an autonomous Rs 500-crore fund, with the Union Government contributing 20 per cent. The balance will come from public sector banks, financial institutions, insurance companies, multilateral/bilateral development agencies, Indian and global corporates, said a presentation by NInC.
He further insisted that the Government must focus on manufacturing and especially on manufacturing for export. “Manufacturing is the Achilles’ heel of the Indian economy. The deceleration in investment in manufacturing is particularly worrying. Consequently, there is no uptick yet in manufacturing.”
The Minister proposed that all taxes, Central and State, that go into an exported product should be waived or rebated. He also proposed that there should be a minimum tariff protection so that there is an incentive to manufacture goods in India rather than import them into India.
Coming to the manufacturing sector, Chidambaram said that the National Manufacturing Policy has set the goal of increasing the share of manufacturing in GDP to 25 per cent and create 100 million jobs over a decade.
“Eight National Investment and Manufacturing Zones (NIMZ) have been announced along the Delhi-Mumbai Industrial Corridor (DMIC) and nine projects have been approved by the DMIC Trust,” he said.
The Minister added that three more corridors connecting Chennai and Bengaluru, Bengaluru and Mumbai, and Amritsar and Kolkata are under different stages of preparatory work.
“Several measures have been taken to promote micro, small and medium enterprises including notifying a public procurement policy, establishing technology centres and common facility centres, and launching the Khadi mark,” FM said.
One of the measures is the National Skill Development Programme. Chidambaram has proposed that Rs 1,000 crore be set aside for 2014-15 in addition to the same amount allocated during the previous year to scale up the programme of the National Skill Development Corporation (NSDC) rapidly.
Of the Rs 1000 crore set apart in previous financial year (2013-14), he said that the whole of that amount will be transferred to the NSD Trust and proposed the transfer of another sum of Rs. 1,000 crore next year (2014-15) to enable the Trust to scale up the programme of NSDC rapidly.
Further, on the social sector initiatives, he said that, “In order to promote entrepreneurship among the scheduled castes and to provide concessional finance to them, IFCI will set up a Venture Capital Fund for Scheduled Castes. I propose to provide an initial capital of `200 crore, which can be supplemented every year.”
The biggest highlight of Chidambaram's speech was the announcement on fiscal deficit. The finance minister said the government will curtail its 2013-14 fiscal deficit to 4.6 per cent of GDP, lower than the red line at 4.8 per cent he drew in the last budget.
India's fiscal deficit will come down to 3 per cent of GDP by 2016-17, Chidambaram added.
He also announced that India's current account deficit for 2013-14 will come down to USD 45 billion and forex reserves will rise by USD 15 billion by end of the current fiscal.
Chidambaram announced the cut duty on consumer durables from 12 per cent to 10 per cent.
The measure is aimed to spur domestic manufacturing at a time when India's economy is growing at the slowest pace in a decade.
Speaking about the foreign trade, India’s exports are expected to grow by 6.3 per cent to USD 326 billion during the current fiscal, Chidambaram said.
“Though 2013—14 began on a pessimistic note, I am happy to inform the House that the year will end with estimated merchandise exports of USD 326 billion, indicating a growth rate of 6.3 per cent,” he said in the interim Budget speech in Parliament.
India’s merchandise exports was at USD 300.4 billion in 2012—13, a decline of 1.8 per cent over the previous year.
“However, imports are down and this does not augur well for either manufacturing or domestic trade. Our aim must be robust growth in both exports and imports, with trade in balance over a period of time,” Chidambaram added.
Further, he said exports have recovered sharply and the recovery must be seen in the context of growth of global trade declining from 6.1 per cent in 2011 to 2.7 per cent in 2013.
He said the government’s objectives included fiscal consolidation, reviving the growth cycle and enhancing manufacturing.
A national interim Budget refers to the budget of a government that is going through a transition period. A vote-on-account presents an estimate of expenditures to be sanctioned by the exchequer till the Budget is passed.