Presented By : Abhishek Unnithan Atul Mishra Pallav Pandey Sonali Agrawal Vasu Rastogi

BUDGET SYSTEM
Budget System was introduced in India on 7th April, 1860. James Wilson the first Indian Finance Member delivered the budget speech expounding the Indian financial policy as an integral whole for the first time. Post independence, the first budget was presented on November 26, 1947 by India s first Finance Minister Sri R.K. Shanmugham Chetty.

Meaning :
A government budget is defined as a legal document that is passed by the legislature, and approved by the chief executive or President. The two basic elements of budgets are revenues & expenses. Government Budget is designed for optimal allocation of scarce resources taking into account larger socio-political considerations.

Scope :
The Budget is presented to the Parliament in such form as the Finance Ministry may decide after considering the suggestions, if any, made by the Estimates Committee. Broadly the Budget documents depict information relating to receipts and expenditure for three years i.e. i. Through Budget Estimates (BE) of receipts and expenditure in respect of Budget year (current financial year) ii. For the year preceding the Budget year (current year) through Revised Estimates (RE); and iii. Actuals of the second year proceeding the Budget year.

Eleventh Five Year Plan 2007-2012

Introduction :
The Eleventh Plan (2007-08 to 2011-12) sought to build on the gains achieved in the tenth Plan and shift the economy to a path of faster and more inclusive growth. Inclusiveness, a critical element in the strategy, was to be achieved by ensuring that growth was broad-based and was combined with programs aimed at overcoming deficiencies in critical areas like health, education and other essential services and programs of livelihood support.

Resilience of the Economy :

The relatively modest slowdown in the face of an exceptional sharp contraction in output in the industrialized world has established the resilience of the Indian economy in terms of its ability to manage a downturn despite greater openness.

There are several reasons for the superior performance on the growth front.  India s financial system was not exposed to the toxic assets which affected the financial system in most industrialized countries. This was the result of a traditionally conservative approach to bank regulations and of a conscious govt. decision to adopt a cautious approach in liberalizing capital flows, especially short-term debt, combined with ample foreign exchange reserves.  The growth in demand which supported rapid growth in GDP was predominantly domestic demand, particularly domestic investment, which increased rapidly in the pre-crisis years.

 The level of private savings has been high and fiscal consolidation in previous years had improved public savings performance. As a result, the domestic saving rate had increased to 36.4% of GDP in 2007-08 and then declined to 32.5% in 2008-09 because of the adverse effect of crisis on tax revenues coupled with the fiscal stimulus.  Gross investments declined from 37.7% in 200708 to 34.9% in 2008-09 and is expected to recover to 36.2% in 2009-10.  Gross fixed capital formation remained about 33%through these years.

Growth Performance :
Indian economy was expected to grow at 8.2% Slow recovery in Infrastructure investment. The Advance Estimates released that economy grew at 6.9% Gross Fixed Capital Formation (GFCF) as a proportion of GDP slipped to 29.3%

Sectoral Development :
Farm sector output growth has been strong as compared to previous year. Avg. GDP growth in farm sector in first half of 2011/12 is 3.7% and full year growth is 2.5% Mining & Quarrying sector (coal, natural gas and crude oil) has shown particular weakness this year. Electricity sector performed well Manufacturing and construction have disappointed Growth in service sector was 9.6% in the first half and year end with a growth of 9.4%

External Payments :
The pressure on the Balance of Payment (BoP) resulted in a very sizeable depreciation in the external value of the Indian rupee. Rupee recovered about 7.5% in the course of Jan& Feb 2012. The council had estimated a Current Account Deficit (CAD) of 2.7% The merchandise trade deficit was projected to rise to 7.7% of GDP For the year as a whole, the BoP position was tight. A weaker currency improved the prospect of exports of both goods & services and also making the price of Indian assets more attractive to foreign investors, help to contract the CAD.

Inflation and Monetary Policy :

Much of inflationary pressure came from primary foods especially pulses, milk, eggs, meat & fish, including cereals in the initial months. The headline rate of inflation stayed closed to 10% for an extended period of twenty two months. The effort of public policy, especially monetary policy, seems to have had its desired effect. The headline rate dropped to 9.1% in November and further to 7.5% in December 2011.