Interim Budget 2009-2010

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Key Features of Interim Budget 2009-2010

Summary of performance during 2008-09

The Gross Domestic Product increased by 7.5 per cent, 9.5 per cent, 9.7 percent and 9 per cent in the first four years from fiscal year 2004-05 to 2007-08 recording a sustained growth of over 9 per cent for three consecutive years for the first time.

The growth drivers for the period were agriculture, services, manufacturing and trade and construction.

Fiscal deficit down from 4.5 per cent in 2003-04 to 2.7 per cent in 2007-08.

Revenue deficit down from 3.6 per cent to 1.1 per cent in 2007-08.

The domestic investment rate as a proportion of GDP increased from 27.6 per cent in 2003-04 to 39 per cent in 2007-08.

Gross Domestic savings rate shot up from 29.8 per cent to 37.7 per cent during this period.

The Gross capital formation in agriculture as a proportion of agriculture GDP Increased from 11.1 per cent in 2003-04 to 14.2 per cent in 2007-08

The tax to GDP ratio increased from 9.2 per cent in 2003-04 to 12.5 per cent in 2007-08.

Annual growth rate of agriculture rose to 3.7 per cent during 2003-04 to 2007-08.

While manufacturing sector recorded growth of 9.5 per cent per annum in the period 2004-05 to 2007-08, communication and construction sectors grew at the rate of 26 per cent and 13.5 per cent per annum respectively.

Exports grew at an annual average growth rate of 26.4 per cent in US dollar terms in the period 2004-05 to 2007-08. Foreign trade increased from 23.7 per cent of GDP in 2003-04 to 35.5 per cent in 2007-08.


Despite the global financial crisis which began in 2007 impacting most emerging market economies, 7.1 per cent rate of GDP growth in the current year makes India the second fastest growing economy in the world.

Fallout of global slowdown on Indian economy were countered with fiscal stimulus packages announced on December 7, 2008 and January 2, 2009 providing tax relief to boost demand and increasing expenditure on public projects.

Government accorded approval to 37 infrastructure projects worth ` 70,000 crore from August, 2008 to January, 2009 alone.

India Infrastructure Finance Company Ltd. (IIFCL) to refinance upto 60 per cent of commercial bank loans for PPP projects involving total investment of ` 1,00,000 crore in infrastructure over the next eighteen months.

RBI to take number of monetary easing and liquidity enhancing measures such as reduction in cash reserve ratio, statutory liquidity ratio and key policy rates.

Government has taken specific measures which include extension of export credit for labour intensive exports, improving pre and post shipment credit availability, additional allocations for refund of Terminal Excise Duty/CST and export incentive schemes besides removal of export duty and export ban on certain items. A Committee of Secretaries set up to address procedural problems faced by exporters.

Record US$ 32.4 billion FDI received in 2007-08 and notwithstanding financial uncertainty and slowdown, FDI inflows during April-November, 2008 were US$ 23.3 billion recording a growth of 45 per cent over the same period in 2007.

FRBM targets for the current year and for fiscal 2009-10 relaxed to provide much needed demand boost. However, medium term objective is to revert to fiscal consolidation at the earliest.



Plan allocation for agriculture increased by 300 per cent from 2003-04 to 2008-09.

Rashtriya Krishi Vikas Yojna launched in 2007-08 with an outlay of ` 25,000 crore to increase growth rate of agriculture and allied sector to 4 per cent per annum during Eleventh Plan period.

Agriculture credit disbursement increased three times from ` 87,000 crore in 2003-04 to about ` 2,50,000 crore in 2007-08.

To strengthen short-term cooperative credit structure, revival package in 25 states involving financial assistance of about ` 13,500 crore is being implemented.

Interest subvention to be continued in 2009-10 to ensure that farmers get short term crop loans upto ` 3 lakh at 7 per cent per annum.

The Agricultural Debt Waiver and Debt Relief Scheme, 2008 was implemented by June 30, 2008 as scheduled.

Debt waiver/debt relief amounting to ` 65,300 crore

Rural Development

Rural Infrastructure Development Fund (RIDF) increased from ` 5,500 crore in 2003-04 to ` 14,000 crore for the year 2008-09. A separate As against 60 lakh houses to be constructed under Indira Awaas Yojana by 2008-09, 60 lakh twelve thousand houses constructed between 2005-06 to December, 2008.

Panchayat Empowerment and Accountability Scheme (PEAIS) proposed to be expanded.

'Project Arrow' to provide new technology enabled services through post offices to common man and support effective implementation of social sector schemes like NREGS, while promoting financial inclusion.


Major initiatives including a new Centrally Sponsored Scheme launched to universalize education at secondary stage in the year 2008-09.

Outlay on Higher Education increased 9 fold in the Eleventh Five Year Plan.

Ordinance promulgated for establishing 15 Central Universities.

In addition to 6 new Indian Institutes of Technology (IITs) in Bihar, Andhra Pradesh, Rajasthan, Orissa, Punjab and Gujrat which started functioning in 2008-09, two more IITs in Madhya Pradesh and Himachal Pradesh are expected to commence their academic session in 2009-10.

5 Indian Institute of Science Education and Research (IISER) announced earlier have become functional.

2 new schools of Planning and Architecture at Vijayawada and Bhopal have started functioning. Teaching is expected to commence from academic year 2009-10 in four out of six new Indian Institute of Management proposed for the Eleventh Plan in Haryana, Rajasthan, Jharkhand and Tamil Nadu.

500 ITIs upgraded into centers of excellence. National Skill Development Corporation created in July, 2008 with initial corpus of ` 1,000 crore.

Social Sector

Authorised capital of National Safai Karamchari Finance and Development Corporation (NSKFDC) is being raised from ` 200 crore to ` 300 crore.

Scope of the pre-metric scholarship for children of those engaged in unclean occupations expanded and rates of scholarship doubled in 2008-09.

Rashtriya Mahila Kosh to be strengthened by enhancing its authorized capital.

146 lakh persons benefited under Indira Gandhi National Old Age Pension Scheme in the current financial year.

Two new schemes - 'Indira Gandhi National Widow Pension Scheme' to provide pension of ` 200 to widows between age groups of 40-64 years and 'Indira Gandhi National Disability Pension Scheme' to provide pension for severely disabled persons.

Widows in the age group of 18-40 years to be given priority in admission to ITIs, Women ITIs and National/Regional ITIs for women. Government to bear cost of their training and provide stipend of ` 500 per month.

22 States and Union Territories initiated process to implement Rashtriya Swasthya Bima Yojana for BPL familities in the unorganised sector and 60 lakh thirty two thousand persons covered for death and disability under 'Aam Admni' Bima Yojana (AABY).

Public Sector Enterprises

Turnover of Central Public Sector Enterprises increased from ` 5,87,000 crore in 2003-04 to ` 10,81,000 crore in 2007-08 and profits grew from ` 53,000 crore to ` 91,000 crore.

While number of loss making enterprises came down from 73 in 2003-04 to 55 in 2007-08, number of profit making enterprises has gone up from 143 to 158 during the same period.

Government approved implementation of Guidelines on Corporate Governance in Central Public Sector Enterprises (CPSEs) in June, 2007.

Corpus of National Investment Fund created out of disinvestment proceeds from Central PSUs stood at ` 1,815 crore as on December 31, 2008.

Financial Sector Reforms

NPAs of Public Sector Banks declined from 7.8 per cent on March 31, 2004 to 2.3 per cent on March 31, 2008.

As a result of initiating process of amalgamation and recapitalization of Regional Rural Banks (RRBs) with negative net worth, 196 RRBs merged into 85 RRBs. The Government has contributed ` 652 crore for capitalization of RRBs upto December 31, 2008.

Number of reforms undertaken in the last four years to deepen and widen the securities markets and strengthen the regulatory mechanisms for these markets.

The Companies Bill, 2008, undertaking comprehensive revision of Companies Act, 1956 to enable adoption of internationally accepted best practices, has been introduced in the Parliament.

Tax Effort

Comprehensive reforms of tax system both direct and the indirect tax system have enabled the tax administration to enhance its functional efficiency and provide better tax payer services leading to increased compliance. Rates of Union Excise Duties and Service Tax rationalized for eventual shift to the Goods and Service Tax on 1st April, 2010.

109 marine vessels sanctioned for the Customs Department to prevent movements of contraband goods across the country's sea borders.

Administrative Reforms

The enactment of the Right to Information Act at the Centre and in many States ushering in greater accountability of the public servants.

Recommendations of the Sixth Central Pay Commission approved by the Government has benefited over 45 lakh Central Government employees including Defence Forces and Para-Military forces and over 38 lakh pensioners.