UNION BUDGET 2009-10

Union Budget 2009-10

The Union Budget for the fiscal 2009-10 was presented by Union Finance Minister, Mr Pranab Mukherjee, in Parliament on July 06, 2009. Budget Highlights: Infrastructure Development IIFCL to refinance 60 per cent of commercial bank loans for PPP projects in critical sectors over the next fifteen to eighteen months. IIFCL and Banks are now in a position to support projects involving total investment of Rs 100,000 crore (US$ 20.61 billion). Highway and Railways Allocation to National Highways Authority of India (NHAI) for the National Highway Development Programme (NHDP) increased by 23 per cent over B.E. 2008-09 in B.E. 2009-10 and allocation for Railways increased from Rs 10,800 crore (US$ 2.23 billion) in Interim B.E. 2009-10 to Rs 15,800 crore (US$ 3.27 billion) in B.E. 2009-10. Urban Infrastructure Allocation under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) stepped up by 87 per cent to Rs 12,887 crore (US$ 2.65 billion) in B.E. 2009-10 over B.E. 2008-09. Power Allocation under Accelerated Power Development and Reform Programme (APDRP) increased by 160 per cent to Rs 2,080 crore (US$ 429 million) in B.E. 2009-10 over B.E. 2008-09. Gas Blueprint to be developed for long distance gas pipelines leading to a National Gas Grid to facilitate transportation of gas across the length and breadth of the country. Agriculture Development Target for agriculture credit flow set at Rs 325,000 crore (US$ 67.14 billion) for the year 2009-10. In 2008-09 agriculture credit flow was at Rs 287,000 crore (US$ 59.3 billion). Restoring Export Growth Adjustment assistance scheme to provide enhanced Export Credit and Guarantee Corporation (ECGC) cover at 95 per cent to badly hit sectors extended upto March 2010. Health Allocation under National Rural Health Mission (NRHM) increased by Rs 2,057 crore (US$ 424.3 million) over Interim B.E. 2009-10 of Rs 12,070 crore (US$ 2.49 billion). Education Rs 2,113 crore (US$ 436.32 million) allocated for IITs and NITs which includes a provision of Rs 450 crore (US$ 92.91 million) for new IITs and NITs. The overall Plan budget for higher education is to be increased by Rs 2,000 crore (US$ 412.86 million) over Interim B.E. 2009-10. Budget Estimate 2009-10 Budget Estimates provide for a total expenditure of Rs 10,20,838 crore (US$ 211.1 billion) consisting of Rs 695,689 crore (US$ 143.81 billion) under Non-plan and Rs 325,149 crore (US$ 67.31 billion) under Plan registering an increase of 37 per cent in Non-plan expenditure and 34 per cent in Plan expenditure over B.E. 2008-09. Total expenditure in B.E. 2009-10 increased by 36 per cent over B.E. 2008-09. Recent Growth Trends in Indian Economy India’s Economy has grown by more than 9% for three years running, and has seen a decade of 7%+ growth. This has reduced poverty by 10%, but with 60% of India’s 1.1 billion population living off agriculture and with droughts and floods increasing, poverty alleviation is still a major challenge. The structural transformation that has been adopted by the national government in recent times has reduced growth constraints and contributed greatly to the overall growth and prosperity of the country. However there are still major issues around federal vs state bureaucracy, corruption and tariffs that require addressing. India’s public debt is 58% of GDP according to the CIA World Fact book, and this represents another challenge. During this period of stable growth, the performance of the Indian service sector has been particularly significant. The growth rate of the service sector was 11.18% in 2007 and now contributes 53% of GDP. The industrial sector grew 10.63% in the same period and is now 29% of GDP. Agriculture is 17% ofthe Indian economy. Growth in the manufacturing sector has also complemented the country’s excellent growth momentum. The growth rate of the manufacturing sector rose steadily from 8.98% in 2005, to 12% in 2006. The storage and communication sector also registered a significant growth rate of 16.64% in the same year. Additional factors that have contributed to this robust environment are sustained in investment and high savings rates. As far as the percentage of gross capital formation in GDP is concerned, there has been a significant rise from 22.8% in the fiscal year 2001, to 35.9% in the fiscal year 2006. Further, the gross rate of savings as a proportion to GDP registered solid growth from 23.5% to 34.8% for the same period.