Background

During 2008-09, the growth rate of GDP of India fell from an average of over 9 % in the
previous three fiscal years to 6.7 %.The wholesale price index of India also witnessed large
fluctuations between 13% in August 2008 to 0% in March 2009. The fiscal deficit of Indian
government had gone up to 6.1% in March 2009.[1] The budget was preceded by an interim
budget by Pranab Mukherjee on 16 Feb 2009.
[edit] Budget Estimates
The total estimated expenditure for 2009-10 was Rs.10,20,838 crore, of which Rs.6,95,689 crore
was towards Non Plan and Rs.3,25,149 crore towards Plan expenditure. Total estimated revenue
was Rs 6,19,842 crore, including revenue receipts of Rs 6,14,497 and capital receipts of Rs 5345
crores, excluding borrowings. The resulting fiscal deficit was Rs 4,00,996 crore while revenue
deficit was Rs 2,82,735 crore.The gross tax receipts were budgeted at Rs.6,41,079 crore and non
tax revenue receipts at Rs.1,40,279.[2]
[edit] Short term economic revival measures
[edit] Infrastructure development
• Allocation of Rs 15,800 crore to National Highways Authority of India.
• Allocation of Rs 12,887 crore to Jawaharlal Nehru National Urban Renewal Mission.
• Allocation of Rs.3,973 crore for housing and provision of basic amenities to urban poor.
• Allocation of Rs 500 crore for Brihan Mumbai Storm Water Drainage Project .
• Allocation of Rs 2,080 crore for Accelerated Power Development and Reform
Programme
[edit] Agriculture development
• Allocation of Rs.411 crore for interest subvention for short term crop loans .
• Extension of time given to the farmers to pay their overdues under Debt Waiver and Debt
Relief Scheme to 31 December, 2009.
• Allocation under Accelerated Irrigation Benefit Programme (AIBP) increased by 75 %
over B.E. 2008-09.
• Allocation under Rashtriya Krishi Vikas Yojana (RKVY) stepped up by 30 % in B.E.
2009-10 over B.E. 2008-09.
[edit] Export growth restoration
• Allocation for Rs.124 crore for Market Development Assistance Scheme
• Extension of deadline for Interest subvention of 2 % on pre-shipment credit for
employment oriented export sectors to March 31, 2010.
[edit] Medium term economic revival measures
• Setting up of an expert group to advise on pricing petroleum products in sync with global
prices.
• Raising of the threshold for non-promoter public shareholding for listed companies.
 • Setting up of State Level Bankers Committee for providing banking facilities in under-
banked/unbanked areas in the next three years.
[edit] Inclusive development measures
• Allocation of Rs.39,100 crore to National Rural Employment Guarantee Scheme
• National Food Security Act to be brought in to ensure entitlement of 25 kilo of rice or
wheat per month at Rs.3 per kilo to every family living below the poverty line in rural or
urban areas.
• Allocation of Rs.12,000 crore to Pradhan Mantri Gram Sadak Yojana and Rs.7,000 crore
to Rajiv Gandhi Grameen Vidyutikaran Yojana.
• Allocation of Rs 8,800 crore to Indira Awaas Yojana and Rs.2,000 crore to Rural Housing
Fund
• Allocation of Rs 100 crore to Pradhan Mantri Adarsh Gram Yojana.
• Interest subsidy to poor households to be provided for loans up to Rs.1 lakh.
• Increase of Corpus of Rashtriya Mahila Kosh from Rs.100 crore to Rs.500
• National Mission for Female Literacy to be launched with the aim to reduce level of
female illiteracy by half in three years.
• Full interest subsidy for student loans during the period of moratorium introduced for
approved courses of study in technical and professional streams from recoganised
institutions in India
• Plan outlay of Ministry of Minority Affairs enhanced to Rs.1,740 crore.
• Rs 75 corers allocated for establishing three campuses for Aligarh Muslim University
• Setting up of handloom mega clusters in West Bengal and Tamil Nadu,powerloom mega
cluster in Rajasthan and mega clusters for carpets in Srinagarand Mirzapur
• Allocation of Rs.12,070 crore to National Rural Health Mission
• Launching of eight national missions under National Action Plan on Climate Change.
• Setting up of National Ganga River Basin Authority and allocation of Rs.562 crore for
River and Lake Conservation Plans.
• One-time grant of Rs.100 crore for Indian Council of Forestry Research and Education,
Dehradun
[edit] Building Accountable Institutions
• Unique Identification Authority of India to set up online data base with identity and
biometric details of Indian residents.
• Rs.430 crore provided to modernise police machinery in the States.
• Rs.2,284 crore proposed for construction of fences, roads, flood lights on the
international borders.
• 1 lakh dwelling units for housing of Central Para-military Forces personnel to be made.
• Increase of pension for servicemen at a cost of Rs 2,100 crore.
 • Rs 495 crore allocated to setting up and upgrading of polytechnics.
• Rs.827 crore allocated for opening one Central University in each uncovered State.
• Rs.50 crore allocated for Punjab University, Chandigarh
• Outlay for Commonwealth games 2010 increased to Rs 3,472 crore.
• Rs.500 crore allocated for rehabilitation of Srilankan Tamils.
• Rs.2,113 crore allocated for IITs and NITs
• Rs.1,000 crore allocated rebuilding the damaged infrastructure caused due to cyclone
Aila in West Bengal.
[edit] Taxation
The tax proposals on direct taxes were claimed to be revenue neutral while those on indirect
taxes were claimed to yield a net gain of Rs.2,000 crore in a year.
[edit] Direct Taxes
• Increase of personal income tax exemption limit from Rs.2.25 lakh to Rs.2.40 lakh for
senior citizens, from Rs.1.80 lakh to Rs.1.90 lakh for women tax payers and from Rs.1.50
lakh to Rs.1.60 lakh for all other categories of individual taxpayers.
• Increase of the deduction under section 80-DD to Rs.1 lakh from Rs.75,000.
• Elmination of surcharge of 10 % on personal income tax
• Extension of deduction in respect of export profits under sections 10A and 10B of the
Income-tax Act till 2010-11.
• Abolition of Fringe Benefit Tax
• Extension of weighted deduction of 150% on in-house R&D expenditure to all
manufacturing businesses.
• Increase of Minimum Alternate Tax from 10% of book profits to 15%.
• Exemption of income of the National Pension Scheme Trust from income tax and any
dividend paid to this Trust from Dividend Distribution Tax
• Abolition of Commodity Transaction Tax introduced in The Finance Act, 2008 .
• Extension of the tax holiday under section 80-IB(9) to profits derived from the
commercial production of mineral oil and natural gas from oil and gas blocks awarded
under the New Exploration Licensing Policy-VIII round of bidding.
[edit] Indirect Taxes
• Imposition of 5% basic customs duty to imported set top boxes
• Reduction of basic customs duty of LCD panel from 10% to 5%.
• Extension of CVD exemption of 4% for components of mobile phones.
• Reduction of customs duty from 10% to 5% for life saving drugs.
• Reduction of customs duty from 7.5% to 5% for life saving devices used in treatment of
heart conditions.
 • Increase of customs duty from Rs 100 to Rs 200 per ten grams for gold bars, from Rs 250
to Rs 500 per ten grams for gold jewellery and from Rs 500 to Rs 1000 per kg for silver.
[edit] Central Excise duties
• Restoring the ad valorem central excise duty of 4 % for cotton textiles beyond the fibre
stage.
• Reduction of basic customs duty on wool waste and cotton waste from 15% to 10%.
• Increase of central excise duty rates for items attracting the rate of 4 % to a mean rate of
8% with exceptions like food items and drugs.
• Reduction of basic customs duty on bio-diesel from 7.5 % to 2.5 %
• Full exemption to such goods manufactured at site for construction industry, when used
for further construction at site.
• Reduction of ad valorem duty for vehicles of engine capacity above 2000 cc to Rs 15,000
from Rs 20,000.
• Reduction of excise duty for Petrol driven trucks from 20% to 8%.
• Exemption of branded jewellery from excise duty.
[edit] Service tax
• Exemption of service tax on the membership and other fees collected by Federation of
Indian Export Organizations.
• Extension of service tax to goods carried by Indian railways and those carried as coastal
cargo or through inland waterways
• Extension of service tax on advice, consultancy or technical assistance provided in the
field of law.
• Exemption of service tax for private enterprises transporting passengers in vehicles
having ‘Contract Carriage Permits’
[edit] Reactions
[edit] Political Parties
BJP president Rajnath Singh criticized the budget, claiming that the government failed to fulfil
the people's expectations. BJP leader Venkaiah Naidu described the Budget as "escapist" and
alleged that no steps were taken to attract investment or to provide relief for farmers. CPM leader
Brinda Karat termed the Budget as s pro-rich and claimed that there were no major allocations in
health, education and food subsidy.CPI leader Gurudas Dasgupta criticized the projected
economic growth as 'utopian'.RJD chief Lalu Prasad Yadav described the Budget as balanced but
criticized it for not providing funds for reconstruction of Bihar following the floods in Kosi.[3]
[edit] Industry
The Confederation of Indian Industry welcomed the budget, claiming that many of their
recommendations were implemented.[4] NASSCOM also welcomed the initiatives like
modernization of employment exchanges, the UIAD project, and smart cards for healthcare
services.[5] Sudip Nandy, CEO of Aricent lauded the one year extension granted to the tax
holiday scheme and the abolition of Fringe Benefit Tax and double taxation on the packaged
software.[6]. D Sucheth Rao of Neuland Laboratories claimed that the government has largely
ignored the demands of the Pharma segment.[7]
[edit] Share market
Sensex- the benchmark index of Bombay Stock Exchange reacted adversely to the budget,
falling over 869 points, a loss of 6.53%- the biggest fall on any budget day and in 2009.Nifty of
National Stock Exchange fell by 258 points. The biggest impact was on banking stocks, with the
sectoral index losing 8.17%[8]
[edit] See also
Dream Budget
[edit] References
1. ^ "India's Fiscal Deficit at 6.1%". Indian Express. 2009-04-01.
http://www.indianexpress.com/news/aprfeb-fiscal-deficit-grew-6.1-per-cent/441529/.
Retrieved on 2009-07-21.
2. ^ Budget at a Glance
3. ^ BJP, Left parties flay Budget
4. ^ CII welcomes budget
5. ^ Nasscom welcomes Union Budget
6. ^ Aricent reaction to Union Budget 2009-10
7. ^ 'Pharma sector demands ignored and MAT disappointing'
8. ^ Sensex records highest Budget-day fall on deficit concerns
[edit] External links
• Government of India Union Budget and Economic Survey
• Finance Minister's Reply to Budget Debate
Retrieved from "http://en.wikipedia.org/wiki/2009_Union_budget_of_India"
Categories: Union budget of India | Economy of India | 2009 in India