Union Budget 2012-13: Growth, fiscal consolidation top challenges

New Delhi - Finance minister Pranab Mukherjee is presenting the Union Budget for 2012-13 against the backdrop of a sharp slowdown in growth, deteriorating fiscal conditions, continuing inflationary pressure and political turbulence.

This is the seventh time Pranab Mukherjee is presenting Budget in the Lok Sabha, the second highest number of time by any finance minister. Pranab had presented Budgets for three consecutive years in early 1980s.

The maximum number of 10 budgets were presented by former Prime Minister Morarji Desai. He held the finance portfolio from 1959-64, 1967-70 and between 1977 and 1979.

Pranab faces a huge challenge of reviving economic growth, which has slowed down over the last six quarters.

The country's gross domestic product (GDP) growth fell to three year low of 6.1 per cent in third quarter of the current financial year. It was recorded 7.7 per cent in the first quarter and 6.9 per cent in the second quarter of the current fiscal.

According the Central Statistical Organisation data, economic growth is expected to fall to 6.9 per cent for the fiscal ending March 31, against the budgetary target of around nine per cent.

The Economic Survey, which was tabled in parliament on Thursday, projected economic growth at 7.6 per cent for 2012-13 and 8.6 per cent for 2013-14.

Fiscal situation has worsened this year. Fiscal deficit is projected to increase to 5.6 per cent of the GDP as against the budgetary target of 4.6 per cent.

Despite the recent moderation, inflationary pressure continues and the Reserve Bank of India said in its mid-quarter review Thursday that it would resurface if the government did not control its spending.

The survey, presented a day before the annual budget, said inflation will remain in the range of 6.5-7 per cent by end of March.

However, it said that fiscal consolidation was the only way to keep inflation down.