The Minister, while winding up general discussions on the Budget in the Lok Sabha, also announced incentives for investment in education and health sectors .
He extended the interest subsidy scheme for fish farmers and fishermen benefiting 20 lakh persons engaged in the activity.
As regards the other demands relating to tax proposals including withdrawal of service tax on healthcare sector, Mukherjee said, "these are under examination".
The minister said he shall respond to these issues while replying to the discussion on the Finance Bill, 2011, later during the session.
The Lok Sabha later passed the supplementary demands for 2010-11 and relevant appropriation bills, completing the first phase of the three-stage budgetary exercise.
There will be no vote-on-account this year as Parliament proposes to complete the whole budgetary exercise within the current fiscal itself.
The announcement to raise the allocation under the MPLADS, a scheme under which MPs are provided funds to undertake development activities, was welcomed by the members cutting across party line.
MPs have been demanding an increase in the MPLADS funds to enable them to take up worthwhile developmental activities in their constituencies. They have been demanding either to raise the allocation or else to scrap the scheme.
"We have considered the matter and I am happy to announce an increase in allocation under the Scheme from Rs 2 crore to Rs 5 crore. This will result in additional allocation of Rs 2,370 crore per year", Mukherjee said.
Although the government obtained the approval of the Election Commission before announcing the scheme, the Minister said, MPs will not be able to utilise the enhanced allocation or make commitments till the ongoing elections in the five states (Assam, West Bengal, Tamil Nadu, Puducherry and Kerala) are completed.
Referring to the issue of rising food prices, Mukherjee took some comfort from the fact that food inflation rise came down from over 20 per cent in Feb 2010 to around 9 per cent.
"It is unacceptable. This figure is equally unacceptable", the Minister said, adding the government was making efforts to increase supply to tame rising price of essential food items.
"At the beginning of last year, food inflation was 20.2 per cent, and now it is 9.5 per cent. However, this figure is equally unacceptable," he said.
Mukherjee said the high inflationary pressure, specially in food and some non-food articles, existed in other emerging economies also.
"I am not making any plea. This is not an excuse that because there is inflation in other areas there should be inflation in India also. It is not. But the fact of the matter is inflationary pressure is visible all over the world. It is not merely in our country," he said.
Linking food inflation to global developments, the Minister pointed out that the surplus liquidity is being converted into commodity.
"There are apprehensions It appears to be the ground reality that surplus liquidity has been converted into commodity such as oil and foodgrain", he said.
Mukherjee said such a trend was also noticed in other essential commodities. "These are the economic factors. We may try to wish them away but we cannot because the global linkage is here..", he said.
The government has taken various steps in the Budget like special initiative for agriculture, supply chain management, promotion of coal chains among others, Mukherjee said. "These are intended to address issues of demand and supply constraints", he said.
He also expressed concern over the state of distribution network in the country including the PDS (Public Distribution System) for Below poverty line (BPL) families saying it was not up to the mark.
The Minister said the government has received a number of suggestions from the expert group headed by Gujarat Chief Minister Narendra Modi on revamping the PDS and added "there are some suggestions which could be implemented."
Mukherjee allayed apprehensions that global events like high oil prices may impact growth and exuded confidence that the economy would return to nine per cent growth in 2011-12.
On black money, Mukherjee said, the government was revising the Double Taxation Avoidance Agreement (DTAA) with several countries and signing Tax Information Exchange Agreements (TIEAs) with tax havens.