Budget 2012: Will this year's budget deliver promises?

Everyone’s looking at what the Union Budget 2012 will hold for economic growth.

Each year, a string of promises are made by finance ministers on how the economy will perform, but not all are fulfilled. Last year’s Budget was a classic case of several unfulfilled promises.

• Last February, the government was extremely upbeat about economic growth as it forecast a gross domestic product of 9 percent, plus or minus 0.25 percent, for the financial year ending March 2012. That was later lowered to 7.1 percent by the Prime Minister’s Economic Advisory Council (EAC) due to the eurozone crisis and an uncertain political environment locally. Now, the expectation is that annual economic growth could be below 7 percent.

• Inflation was forecast at 5 percent for the current financial year. However, the high prices of  vegetables, pulses and dairy products pushed inflation closer to 10 percent for 22 months, until October last year. Inflation then tapered off to 9.1 percent in November and fell further to 7.74 percent in December. Currently, it’s hovering at 6-7 percent.

• In his last speech, the fiscal deficit  was projected at 4.6 percent of GDP. It’s no secret that this figure will now be much higher — possibly 5.6 percent of GDP. A Firstpost story noted that while the markets will accept a deficit of near 5 percent reasonably well, any number closer to 5.5 percent will be taken negatively.

• The total subsidy bill was pegged at Rs 1, 40,000 crore for the current financial year. Fertilisers, which constitute about one-third of the total subsidy bill, are expected to rise further. According to the Fertiliser Association of India, the bill for the current fiscal is expected to cross Rs 70,000 crore as international prices of inputs and fertiliser prices spiked. Food and petroleum subsidies are also expected to surge above budgeted estimates, according to a report in the New York Times.

• Disinvestment remains another area where the government has not been able to fulfill its requirements. In Mukherjee’s last speech, the government had targeted disinvestment revenues of Rs 40,000 crore. However, sagging stock markets allowed the government to raise just a mere ,

Let’s see how credible Mukherjee’s promises for the new financial year are.