SHRI P. CHIDAMBARAM (CONTD): The other way to increase the purchasing power in the hands of the people is to tax them less.  We have cut a range of excise duties.  I can explain each cut and why it was cut.  When I reply to the Finance Bill, I will explain why it was cut.  Why some taxes are imposed, why some taxes are cut, why some relief is granted to some sectors, why certain undeserved or outdated reliefs are taken away, I will explain that while replying to the Finance Bill.   I think, today, we are on a virtuous path and I would urge the House to endorse the approach of the Government.  The Government's approach is, keep tax rates stable and moderate, garner more resources, devolve more to the States, spend through the Central Government Ministries and Departments wisely, prudently  and on time, pump more money into the economy and then you will find the growth rates continue to remain high.

       Sir, given this broad philosophy, I think, in the Budget, I have adhered to that.  I have allocated -- I won't repeat the figures -- much larger sums, today, for the flagship programmes.  I have allocated much larger amounts to 'Bharat Nirman'.   I think, when the Outcome Budget is presented on the 17th of March or so, you will find that the physical outcomes are much better in the current year than ever before.  Since every Ministry  is now required to report the physical outcomes and every Ministry is now required to place its own Outcome Budget in the House, you will have an opportunity to question the Ministry as to where are the outcomes for the money that we allotted to you.  I think it is a great opportunity for the House to question each Ministry and Department on the outcomes.  They will all come in the next three days.  I think, a series of Outcome Budgets are going to be presented to the House.  I will present an Overview Outcome Budget and then you will have an opportunity to question each Ministry and Department.  Based on the kind of responses that you elicit, we can refashion our strategy for the next year.  We are trying to refashion our strategy.   If there are any Departments which are limping, we can certainly energise them to make sure that they deliver better physical outcomes than in the current year or in the previous year. 

       Let me briefly respond to some of the concerns raised by the hon. Members.   Some concerns were legitimate and some, I am sorry to say, were outrageous.  I think the most outrageous comment I heard in this House was that this relief to agriculture of 2 per cent in the interest was an eyewash,  legerdemain, sleight of hand and that I was really  giving a relief of Rs, 180/- or so, and not Rs. 1,700 crores.  Shri Sharad Joshi, for whom I have great respect, repeated the allegation and I responded to him.  But since most of the Members were not there, I wish to respond again.  This is an outrageous allegation.  I mean some people think that they are Machiavellian and they can distort good ideas.  What is the idea?  I do not claim to speak Queen's English.  Wherever I learnt my English, I know only that much English.   What did I say in my Budget Speech?  I said, "Interest relief of 2 percentage points of the borrowers liability is being given".  I did not say interest relief of 2 per cent is being given.   I said, "Interest relief of 2  percentage points".  Even people from my Constituency, who have only studied in Tamil, understood what I said.  If the borrower's interest rate was 9 per cent, it means that he will now be charged 7 per cent.  If it was 8.5 per cent, he will be charged 6.5 per cent.  If it was 9.5 per cent, he will be charged 7.5 per cent.  I thought it was quite plain.  We have allocated Rs. 1,700 crores.  Yet to charge the Government that what you have done is an eyewash and that you have really given Rs. 180/- or Rs. 200/-, I think, it is an outrageous allegation. What we have decided is for the year that has come to an end, kharif and rabi 2005-06, 2 percentage points of the interest rate charged to that farmer is being knocked out of his interest liability and is being credited to his account.  Orders have been issued by the Reserve Bank of India on the 9th March and these orders clearly  say that if  banks or  PACS or  regional rural banks  or commercial banks, have lent him money, say, Rs. 1 lakh at 9 per cent and his interest liability is Rs. 9,000, whether he has  paid or not paid, Rs. 2,000 is being credited to his account, straightway, and the credit will be in his account on the 31st of March.              (Contd. by 2B) 


SHRI P. CHIDAMBARAM (contd.):  So every farmer will have money credited in his account equal to two percentage points.  For the next year we have now announced that the farm credit for short-term crop loan will be available at 7 per cent.  But then, should we do more?  Maybe, yes.  Can we do more?  The answer is, 'No', because the bank rate today is 6 per cent; the Reverse Repo Rate is 6.25 per cent;  the call money rates are hovering between 6 and 7 per cent; the interest rates are hardened; of course, the inflation is under control at 4.2 per cent or so.  Having regard to all these, we think that the economy today can afford only to ask the banks, to lend to the farmers at 7 per cent.  Even this will require banks being persuaded.  As far as the PACs and RRBs are concerned, the refinance rate of NABARD will be so calibrated that the ultimate rate to which the money is lent to the farmer will be 7 per cent.  As far as commercial banks are concerned, since there is no refinance by NABARD, we have to carry the commercial banks with us; we will have to persuade them, and find ways and means in which the credit will be made available at 7 per cent.  But I assure the House -- I have called a meeting of the Chairmen of the Banks on the 23rd March -- that we will find a way, that beginning Kharif 2006, every farmer in this country, who gets a loan from a PACs or from a RRB, or from a commercial bank will get the loan at 7 per cent.  That is my promise, and this Government will implement that promise. 

       Sir, there were some comments about repair, restoration and renovation of water bodies.  This is an important project and I will tell you why.  One of the main reasons why the agriculture growth rate shows volatility is because agriculture is monsoon-dependent.  We must make our agriculture less monsoon-dependent.  One of the ways is to expand irrigation. With the Accelerated Irrigation Benefit Programme, the Minor Irrigation Schemes and the Medium Irrigation Schemes, and now, through the NREGP, the various public works, including building canals, will bring more and more acreage under what we call 'assured irrigation'.  But there is another untapped opportunity for increasing the acreage under assured irrigation, and that is, the repair, restoration and renovation of water bodies.  Sir, this project is at an advanced stage.  States were consulted.  They have accepted the funding pattern.  We have worked out a scheme that is going to cost us, as I said in the Budget, approximately Rs.4,400 crores.  In the first phase, 20,000 tanks will be covered; that is not a small number, as one of the speakers said, because that will add 14.7 lakh hectares to assured irrigation.  These are all large water bodies with a large command area.  So, 14.7 lakh hectares will be added to assured irrigation.  We will go to the World Bank and the ADB, and ask for money.  Both have, in principle, said that they will support the programme.  The States have been asked to sign the MoUs, and they have agreed to sign the MoUs.  This programme will be implemented, and when we implement this programme along with the AIBP, the Medium and Minor Irrigation Projects, more and more acreage will come under assured irrigation.  And, to that extent, agriculture will become less monsoon-dependent.  When that happens, you will find that the agricultural growth rate also becomes secular.  Today the manufacturing growth rate is more or less secular at 8 to 8 1/2 per cent; the services sector growth rate is more or less secular, at about 9 per cent.  Unless we commit grievous mistakes, I believe, these are secular growth rates.  If the agriculture growth rate must become secular at about 4 per cent, this is an important project, and the Government attaches highest importance to this project, and we will implement this project.                        (Continued by 2C)


SHRI P. CHIDAMBARAM (CONTD.): Because the Government is secular, we want secular growth rates.

       Sir, some comment was made that we have allocated less money to the drinking water project. I don't know where these numbers come from. These numbers are there in the Budget documents. In BE 2005-06, we allocated to India, including the North-Eastern Region Component, Rs.4,050 crores, and, we actually spent Rs.4,060 crores. In 2006-07, the allocation is Rs.5,200 crores. So, it is a jump from Rs.4,060 crores to Rs.5200 crores. I don't know why the distinguished speaker said that we are allocating less to drinking water.

       Sir, a question is asked about what happened to the Education Cess that we collected. Obviously, the Education Cess that is being collected has gone to support education. The figures speak for themselves. In 2004-05, the Cess amount collected was Rs.4,320 crores, the expenditure incurred on education is Rs.8,035 crores. In 2005-06, we collected, according to the Revised Estimates, Rs.7,098 crores, and the expenditure incurred on education is, i.e., SSA and Mid-Day Meal Scheme, Rs.11,156 crores. On the 14th of November, 2005, we made an important change, we created the Prarambhik Shiksha Kosh -- I hope, I am pronouncing it correctly -- ...(Interruptions)... Okay, Prarambhik Shiksha Kosh, now, it is correct. Therefore, any unspent balance out of the Revised Estimates will automatically go to the Kosh. And, this year, in 2006-07, I expect to collect Rs.8,746 crores, and that will go directly into the Kosh, and from the Kosh, it will go to the SSA and MDMS. As against, Rs.8,746 crores that I expect to collect, the budgetary allocation for SSA and MDMS is Rs.16,348 crores. If you look at it even the other way, what is the budgetary support you are providing, apart from the Cess, you have to deduct the budgetary allocation from that number, please subtract the Cess number, you will find that for the current year the difference between the budgetary allocation and the Cess collection was approximately Rs.4,000 crores. For the next year, the difference between budgetary allocation and the Kosh number is about Rs.8,000 crores, which means that apart from the Cess collected, more money is being provided through the Budget. I want that message to go very clearly. Let anyone not think that I am spending for SSA and MDMS only through the Kosh Cess, and I am not providing enough through the Budget. On the contrary, more money is being provided from the Budget even while the Cess collection is entirely being sent through the Kosh to the SSA and MDMS.

SHRI SITARAM YECHURY: The SSA has external funding also.

SHRI P. CHIDAMBARAM: No; SSA is on the Budget. Maybe...(Interruptions)...

SHRI SITARAM YECHURY: The Sarva Shiksha Abhiyan has external funding also. ...(Interruptions)...

SHRI P. CHIDAMBARAM: No; no. Some bilateral funding has been there for some project in Madhya Pradesh, the old project. It is very small. There is no external funding in this Rs.11,000 crores.

       Sir, a question was asked about PSU revival. It is something about which, I am sure, Mr. Yechury will be keen to know. Now, contrary to popular impression, and to some extent, popular mythology, we are reviving public sector enterprises. We have, so far, received 28 proposals from the BRPSE. Thirteen proposals have been considered at the highest level of the Government, namely, the Cabinet and the CCEA. The total cash sacrifice on these 13 proposals is Rs.1,625 crores, and the non-cash sacrifice is Rs.4,542 crores. The non-cash sacrifice...

SHRI SITARAM YECHURY: Why do you call it 'sacrifice'?

SHRI P. CHIDAMBARAM: It is. Because I have to write off. It is money for which I am bound to account for. To the extent that I am accounting for the money, and I am saying, 'I am writing off it', this is a sacrifice that we are making in order revive public sector concerns.(Contd. by 2d)


SHRI P. CHIDAMBARAM (contd.): You can call it by another word. The point is, in accounting, I am writing this off and I am providing the money. So, approximately, Rs. 6100 crores is being provided either by way of cash provision or by non-cash provision to revive thirteen PSUs that have been sent to us, by the BRPSE; the remaining will be taken up by the Government one by one. They will come to the Cabinet and we will consider one by one. I have details of each company.

       Questions were asked about Heavy Engineering Corporation. In the case of Heavy Engineering Corporation, the cash component is Rs.102 crores and the non-cash component is Rs.2169 crores.

SHRI DIPANKAR MUKHERJEE: So far as writing off from the book is concerned, for non-cash, even if you close the factory that would have been sacrificed. I am repeating your language. So far as non-cash accruals are concerned, they are revenue neutral.

SHRI P. CHIDAMBARAM: Whether they are revenue neutral or not, it is really counter-factual to call it revenue neutral. Unless we decide to close down the company and sell it, you will never know what you will realise. It is counter-factual. We do not know. We are not taking that route. The route that we are taking is to revive. We are reviving it. All that I am pointing out is, upfront money is being provided in many cases and we are also writing off loans, interests, etc., etc. The point is, in financial terms, Rs.6100 crores has been provided to revive thirteen companies. And to revive the remaining, whatever the Cabinet approves, will be provided.

       Sir, there were some questions about why we are importing wheat. I think, the Prime Minister has clarified it on an occasion. The Agriculture Minister also has clarified it.  Last year and the year before, the wheat procurement was low because of monsoon failures and, therefore, wheat production was low and the wheat procurement was low. Therefore, in order to ensure that wheat prices do not flare up, in fact, when I come to inflation, I will deal with it briefly. We are importing a very small quantity of wheat, 5 lakh tonnes, to the southern States where wheat is not grown. So, it has no impact on the northern States, it has no impact on procurement, there is no impact on prices in the northern States. In the southern States, in order to augment availability of wheat to the PDS, who wish to buy wheat, we are importing 5 lakh tonnes. It is not correct to say that the cost of imported wheat is higher than the cost of Indian wheat procured through MSP operations. In fact, the cost is, more or less, the same. Going by the MSP of Rs.640 per quintal adding labour, transportation charges, storage and interest charges, adding administrative charges and distribution costs, in fact, the cost of indigenous wheat comes to about Rs.10,300 per MT. The cost of imported wheat into the southern States of India is Rs. 9978 per MT, but this could marginally vary; the cost is about the same. So, we are not importing wheat at a cost much higher than domestic wheat; we are importing a small quantity as a pre-emptive measure, as a precautionary measure. The popular statement is, "it is better to be safe rather than sorry." We do not want any psychology of scarcity, any scare about scarcity to be propagated among the people. We are importing 5 lakh MT into the southern States. I think, it is a wise decision. Such wheat has been imported, I believe, in 1997-98, 1998-99, earlier again, if I recall in 1991-92. Wheat imports have taken place in the past and wheat imports will take place. It is a very small quantity of 5 lakh tonnes, just to make sure that we are safe rather than sorry later.

SHRIMATI BRINDA KARAT: The question we had raised was that you are giving foreign traders Rs.300-400 more than you are giving to Indian peasants. That was the issue that had been raised during the course of the Budget discussion.

SHRI P. CHIDAMBARAM: I am sorry, that is not correct. Wheat prices are determined not by the Government of India. Wheat prices are determined by the internationally ruling prices.        (Contd. by kls/2e)


SHRI P. CHIDAMBARAM (CONTD): If you want to buy wheat, you can only buy wheat at that price.  But your argument could be, do not buy wheat abroad. 

SHRIMATI BRINDA KARAT:  We are saying, procure more. ...((Interruptions)...

SHRI P. CHIDAMBARAM:  If we procure more adding all the cost, the cost to the PDS will go up so much more.

SHRIMATI BRINDA KARAT:  That is why you do not want to give some subsidy. ...((Interruptions)...

SHRI P. CHIDAMBARAM:  Madam, please understand.   I am just giving you the figures.  At a procurement price of Rs.640 per quintal, the cost per metric tonne comes to Rs.10,300,  imported wheat comes to, say,  about Rs.10,000.  Both are the same.  If you pay more to the Indian farmer - and I am saying he should be paid, I am not saying that he not should be paid -- you have to add all these costs again.  You cannot cut these costs. The costs to the PDS will be certainly much more; the costs to the PDS client who buys his wheat, they will have to be more.  Therefore, by importing five lakh tonnes of wheat, I am not creating any major disturbance either in the price or costs.  I am simply augmenting the availability of wheat in Southern States, as I said, so that we do not have to be sorry later.  We are trying to be safe.  Sir, some questions were raised about...(Interruptions)... I am not saying import of wheat is cheaper.  All I am saying,  I am answering the argument that the imported wheat is considerably costlier than domestically procured wheat, that is not correct. Both are, when reach the consumer, of the same price and we are only importing a very small quantity.  It has been explained by the Prime Minister and the Agriculture Minister that this is to ensure that the for the Southern States there is enough wheat and the prices do not flare up.  Sir, Some questions were raised about NHAI.  I have said this many times and I said in my Budget Speech, these are all facts.  Now you can always find explanation and I am willing to offer one.  When the NHAI was started obviously in the initial months, the number of kilometres constructed were zero because they would had to get the system ready, gear the organisation, etc.  But simply going by the period during which NDA was in office and  the period during which UPA has been in office, I have simply given an arithmetical comparison to refute the argument.  This is point -- to refute the argument that we have deliberately slowed down the Golden Quadrilateral,  or the  East-West  North-South corridors.  My purpose is not to score a point.  My purpose was to meet a point, which I think was re-scored against us by saying that we have deliberately slowed down, that we have removed Mr. Vajpayee's picture and, therefore, we have slowed it down.  I do not know what has removing Mr. Vajpayee's picture got with the pace of progress there.  The pace of progress is not related with whether a picture is exhibited there or not.  The pace of progress has quickened, as it is bound to.  If the previous Government had remained in office - God forbid -- maybe, the pace of progress would have continued to increase.  But the point is I am refuting the argument that the pace of progress has slowed down.  In 2002-03, when we took over in May 2004, 48 per cent of the GQ would have been constructed.  By February 2006, 90 per cent of the GQ has been constructed.  If you look at the expenditure per kilometre , 2002-03, it was Rs.1.3 crore per kilometre, in 2004-05, it increased to Rs.1.58 crores per kilometre and in 2005-06 it increased to Rs.2.31 crores per kilometre which mean each kilometre is being completed  at a quicker rate because more money is being spent and the unspent money is being spent now and more kilometres are being constructed.  Mr. Yashwant Sinha raised questions about some projects in Hazaribagh, which according to him have come to a standstill.  They have not.  Since he is not here, I do not wish to take the time of the House to tell him that perhaps, he last visited the projects many months ago.  He should revisit them again to see that these projects are continuing and the bridges are being constructed.  Sir, in fact, I am told that one of the works is being implemented by the Road Construction Department of the Government of Jharkhand and the reason why the progress has slowed is because of a dispute between the contractor and the Government of Jharkhand.  So, while Mr. Yashwant Sinha was a guest of the Government of Jharkhand for a few days, he might have taken the opportunity to tell the Government of Jharkhand to resolve the dispute with the contractor so that work can be taken up. (Contd by 2F)


SHRI P. CHIDAMBARAM (CONTD.):  Sir, I think, I have answered most of the points unless there is any specific point which any hon. Member thinks that I should have answered and I have not answered.

SHRIMATI BRINDA KARAT:  Sir, I may just put one question to the Finance Minister that the issue of food security through various employment programmes has also been a component of the employment programmes in the Rural Development Ministry. 

(MR. DEPUTY CHAIRMAN in the Chair)

And what we have seen, as far as SGRY is concerned, is that there is no mention at all of the food component.  So, since the REGA at present is only for 200 districts, the question, which I had specifically raised, was: what is going to happen to those 400 districts?  You have given only Rs. 2700 crores for 400 districts with no element of the food component at a time when mismanagement of food stocks is showing that you don't have enough wheat. So, what is going to happen to that aspect?  That is one of the questions.  Should I ask all of them together?

SHRI P. CHIDAMBARAM:  No, no that is for the Chairman to decide.


SHRI P. CHIDAMBARAM:  Sir, this is a matter of simply accounting.  In the beginning of year, it has been the practice only to show that the cash component and make, if at all, a token provision for the food component.  That is a running account with the Food Corporation of India.  Food Corporation thinks that it is a running deficit account but it is running account of the Food Corporation of India.  For example, in 2002-03, the B.E. figure was Rs. 3,996 crores, the R.E. figure Rs. 8,642 crores.  In 2003-04, the B.E. figure was 4,487, the R.E. figure was 9,639.  So, take for example, 2005-06, the year that is coming to an end.  If you look at the B.E. figure, it is Rs. 3600 crores, R.E. figure is Rs. 7650 crores.  Therefore, in the B.E. figure I have shown Rs. 2,700 crores. That does not mean the R.E. will be RS. 2700 crores.  In the R.E., I will take into account the money that I provide to the Food Corporation of India for the food that is provided and in the R.E. you will find the real figure.  It is not as though the food component will not be provided for or paid for.  The food is provided by the Food Corporation of India.  It is an accounting matter.  At the end of the year, I will give the money to the FCI and whatever money I give FCI, the food will be given.  FCI and I have a running account.  In fact, it is a credit given to me by the FCI.  I owe money to the FCI.  We are trying to liquidate those arrears.  These arrears are being built up over many, many years.  We are trying to liquidate as much as possible.   That does not mean food is not being provided.  Foodgrain will be provided.  The foodgrain will be provided to the 400 districts.  The foodgrain will also be provided to the NREGP.  At the end of the year, when the bill is paid, whatever bill is paid will be added and the R.E. will disclose the real figure.  So there need be no worry that neither foodgrain will be provided.  Don't have any worry.  Foodgrain will be provided and FCI need not have any worry that I won't pay for the foodgrain.  I will pay for the foodgrain.

SHRI RAVULA CHANDRA SEKAR REDDY:  Sir, when I raised a question regarding National Agricultural Insurance Scheme, I thought that since my party is a small party, the Minister preferred not to reply.  When Yechury also raised, I thought you would reply. 

SHRI P. CHIDAMBARAM:  I will answer.

SHRI RAVULA CHANDRA SEKAR REDDY:  Sir, you have said in simple words stating that the National Agricultural Insurance Scheme will be continued in the same format.  That is the only line you read during your Budget Speech.  We wanted more simplification, more support for the weaker sections, more particularly the small and marginal farmers and extension to the other fields also, taking village as unit.  You never bothered to reply.  I request you to reply on this.  Thank you.

SHRI P. CHIDAMBARAM:  Sir, there is a modified National Agricultural Insurance Scheme which is under consideration.  The Ministry of Agriculture has proposed a modified scheme.  It is now being considered by the Planning Commission.  Unfortunately, that consideration is not complete.  The Cabinet has not yet cleared and, therefore, I could not include it in the Budget Speech.  As of today, we are sharing with the State the subsidy on the premium and the Central Government is also paying the claims.  The figures, I recall are in the region of about Rs. 6000 crores or so.  The modified Agricultural Insurance Scheme when considered by the Planning Commission and when taken to the Cabinet, once it receives approval of the Cabinet will be announced in this House and we will implement that scheme. 

(Contd. by NBR/2G)


SHRI P. CHIDAMBARAM (CONTD.): Pending that, I cannot leave matters in a vacuum.  Therefore, I said, the NAIS has been continued in its present form.  But, we are working on a modified scheme and we will take on board your suggestion that the unit must not be the block; the unit must be the village.  It is a very complicated exercise.  It is not an easy exercise.  If it were an exercise, someone would have been attempted in six years when we were not in power.  Therefore, it was not done in six years when we were not in power.  Soon after we came to office, the Agriculture Minister and myself have held several meetings with the stakeholders to have a modified Agricultural Insurance Scheme.  It is under preparation. And, we will come back to the House.

       Sir, let me conclude the debate by saying, I think, the economy, today, is on a virtuous growth path.  I seek the support of all sections of the House.  Nothing should be done to hinder investment.  Nothing should be done to affect the growth story.  We must bet on growth.  We must lend a hand to agriculture.  And, that is what we are doing.  I would request the hon. Members to extend support to the Budget.  Thank you.                                                             


MR. DEPUTY CHAIRMAN: The debate on the Budget (General), 2006-07 is over.  Now, let us take up the Appropriation Bills.  Mr. Finance Minister, you move both the Bills.





That the Bill to authorise payment and appropriation of

certain further sums from and out of the Consolidated Fund of India for the services of the financial year 2005-06, as passed by Lok Sabha, be taken into consideration.


The question was put and the motion was adopted

MR. DEPUTY CHAIRMAN: Now, we shall take up Clause-by-Clause consideration of the Bill.

Clauses 2 and 3 were added to the Bill.

The Schedule was added to the Bill.

Clause 1, the Enacting Formula and the Title were added to the Bill

SHRI P. CHIDAMBARAM: Sir, I beg to move:

       That the Bill be returned.

The question was put and the motion was adopted.



That the Bill to  provide  for  authorization  of

appropriation of moneys out of the Consolidated Fund of India to meet the amounts spend on certain services during the financial year ended on the 31st day of March, 2004, in excess of the amounts granted for those services and for that year, as passed by Lok Sabha, be taken into consideration.


The question was put and the motion was adopted

MR. DEPUTY CHAIRMAN: Now, we shall take up Clause-by-Clause consideration of the Bill.

Clauses 2 and 3 were added to the Bill.

The Schedule was added to the Bill.

Clause 1, the Enacting Formula and the Title were added to the Bill

SHRI P. CHIDAMBARAM: Sir, I beg to move:

       That the Bill be returned.

The question was put and the motion was adopted.


MR. DEPUTY CHAIRMAN: The House is adjourned for lunch till 2.30 p.m.


The House then adjourned for lunch at thirty-five minutes past

one of the clock