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Budget stresses focus on aam aadmi: Govt
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February 16, 2009 14:28 IST

The Interim Budget highlights the focus on aam aadmi in the development process. The year 2008-09 has seen substantial increase in outlays spanning across sectors.

Continuing the trend, the budget for 2009-10 will have increased plan outlays for key sectors and adequate allocations for the flagship programmes which directly impact aam aadmi.

The other major highlights of the passing financial year were a massive debt waiver for farmers and two stimulus packages to counter the negative fallout of the global economic slowdown.

In the Interim Budget presented in the Lok Sabha on Monday, Finance Minister Pranab Mukherjee, indicated that 'additional plan expenditure of anything from 0.5 per cent to 1.0 per cent of the GDP' will need to be considered in the regular budget, to be presented by the government after the general elections.

The Growth Trend

The Finance Minister also highlighted that the economy has grown at a healthy rate in the recent years. The Gross Domestic Product has increased by 7.5 per cent, 9.5 per cent, 9.7 per cent 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.

With per capita income growing at 7.4 percent per annum, this represented the fastest ever improvement in living standards over a four-year period. The growth drivers for the period were agriculture, services, manufacturing along with trade and construction.

The fiscal deficit has come down from 4.5 per cent in 2003-04 to 2.7 per cent in 2007-08 and revenue deficit from 3.6 per cent to 1.1 per cent in 2007-08. He further stated that the annual growth rate of agriculture rose to 3.7 per cent during 2003-04 to 2007-08.

Foodgrain production recorded an increase of 10 million tonnes each year during this period and touched an all time high of 230 million tonnes in 2007-08.

The manufacturing sector recorded a growth of 9.5 per cent per annum in the period 2004-05 to 2007-08, and exports grew at an annual average growth rate of 26.4 per cent in US dollar terms during this period.

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.

Flagship Programmes

Adequate funds have been ensured for the flagship programmes. The National Rural Employment Guarantee Scheme gets Rs 30,100 crore for the year 2009-10. This Scheme generated 138.76 crore person days of employment covering 3.51 crore households in 2008-09.

An allocation of Rs 13,100 crore has been provided for b. This Scheme has made significant contribution in providing access to and infrastructure for elementary education.

Allocation for the national programme of Mid-day Meals in schools has been kept at Rs 8,000 crore in 2009-10. This is the world's largest school feeding programme and has contributed to enhancement of school participation, reduction in class room hunger, and fostering of social and gender parity.

The Integrated Child Development Scheme gets an allocation of Rs 6,705 crore. This Scheme was expanded twice in the last five years to cover the hitherto uncovered habitations across the country.

Rs. 11,842 crore have been proposed for the Jawaharlal Nehru National Urban Renewal Mission. Under this Mission, 386 projects amounting to Rs 39,000 crore have been sanctioned at the end of 2008.

Rajiv Gandhi Rural Drinking Water Mission is to receive Rs 7,400 crore for supplying safe drinking water to uncovered habitations and slipped back habitations.

Rs 1,200 crore are being provided for the Total Rural Sanitation Programme. Rs 12,070 crore are being allocated to the National Rural Health Mission.

Bharat Nirman, the time-bound plan for building rural infrastructure receives Rs 40,900 crore. This package has six components � rural roads, telephony, irrigation, drinking water supply, housing and electrification.


The Finance Minister highlighted the focused attention given by the Government to the farming sector. The highlights include 300 per cent rise in Plan allocation for agriculture in the last five years and launch of Rs 25,000 crore Rashtriya Krishi Vikas Yojana to increase farm growth to four per cent per year during the XI Plan.

Credit disbursement to the farm sector has gone up from Rs 87 thousand crore in 2003-04 to about Rs 2.5 lakh crore in 2007-08 marking a three fold increase. Shri Mukherjee announced that the Government will continue to provide interest subvention in 2009-10 to ensure that farmers get short term crop loans upto Rs 3 lakh at 7 per cent per annum.

The Government announced the Agricultural Debt Waiver and Debt Relief Scheme for farmers in the last budget and implemented it by June 30, 2008 as scheduled. The Scheme has been able to restore institutional credit to indebted farmers. As per early reports, the total debt waiver and debt relief so far, amounts to Rs 65 thousand three hundred crore covering 3.6 crore farmers.

Remunerative prices have been given to farmers for their crops. Since 2003-04, Minimum Support Price (MSP) for the common variety of paddy was increased from Rs 550 to Rs 900 per quintal for the crop year 2008-09. In case of wheat the increase was from Rs 630 in 2003-04 to Rs 1,080 per quintal for the year 2009.

Rural Development

A number of programmes have been designed to help improve the living conditions of rural population. The corpus of the Rural Infrastructure Development Fund has increased from Rs 5,500 crore in 2003-04 to Rs 14 thousand crore for the year 2008-09 ensuring greater availability of funds for developing rural infrastructure.

Under the Indira Awaas Yojana, 60.12 lakh houses have already been constructed by the end of 2008 as against the target of building 60 lakh houses by March 2009.

The Government proposes to substantially expand the Panchayat Empowerment and Accountability Scheme. The Project Arrow, the postal scheme to provide new technology � enabled services to the common man, will also receive full Government support.


The Finance Minister has called 2008-09 as a 'momentous year for secondary education' as several major initiatives including a new Centrally Sponsored Scheme to universalize education at secondary stage were launched during the year.

Outlay on higher education has been increased 900 per cent in the XI Five Year Plan. An ordinance to open 15 Central Universities has been promulgated, 6 new IITs have started functioning, two more IITs are expected to commence their academic sessions in 2009-10, five Indian Institutes of Science Education and Research have become functional, teaching is expected to commence in four out of six new IIMs and two new schools of Planning and Architecture have started functioning.

Since 2004-05 nearly 500 ITIs have been upgraded into centres of excellence and a National Skill Development Corporation has been created to stimulate and coordinate private sector participation in skill development.

Social Sector

Many Schemes have been initiated for women and weak and downtrodden people of the society. A new Ministry of Minority Affairs has been set up and a 15-point programme has been announced for the welfare of the minorities.

The Scheduled Tribes and other Traditional Forest Dwellers (Recognition of Forest Rights) Act has helped in getting to Scheduled Tribes and other traditional forest dwellers legal rights on forest lands.

The authorized capital of the National Safai Karmachari Finance and Development Corporation has been increased. The Finance Minister announced that the authorized capital of the Rashtriya Mahila Kosh will also be strengthened.

The Aam Aadmi Bima Yojana has provided death and disability cover to over 60 lakh rural landless. A Rashtriya Swasthya Bima Yojana for BPL families has also been started. As on January 15 this year, 22 States and UTs have initiated the process to implement the Scheme.

The Finance Minister announced that two new schemes, Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme are being launched in the current year to provide pension to widows and severely disabled persons, respectively. He also proposed to give priority to young widows in admissions to ITIs and to provide stipend and bear training cost.

Financial Sector and Tax Reforms

The Finance Minister informed that the asset quality of Public Sector Banks has improved and non performing assets have declined considerably from 2004 to 2008. He also enumerated the steps taken to promote a safe, transparent and efficient share market and to protect market integrity. He further informed that the Companies Bill 2008 has been introduced in parliament to make the Companies Act a compact law adopted to internationally accepted best practices.

The Government has rationalized income tax rates and steadily reduced customs duty rates. Rates of Union Excise Duties and Service Tax have also been rationalized. Tax administration is being modernized through extensive use of information technology. 109 marine vessels are being acquired form the Customs Department to prevent movement of contraband goods across the country's sea borders.

Budget Provisions

The Budget for 2009-10 will have total expenditure of Rs 9,53,231 crore, comprising Rs 2,85,149 crore under Plan and Rs 6,68,082 crore under non-Plan. The Gross Budgetary Support for the Plan is 17.16 per cent higher than that in 2008-09.

To ensure continuity in financing of rural infrastructure projects, RIDF-XV is being proposed with a corpus of Rs 14,000 crore. The separate window for rural roads with a corpus of Rs 4,000 crore will continue.

To counter the negative impact on exports due to the global financial crisis, the interest subvention of 2 per cent on pre and post shipment credit for certain employment oriented sectors is proposed to be extended.

It is proposed to recapitalise the public sector banks over next two years to enable them to maintain Capital to Risk Weighted Assets Ratio (CRAR) of 12 per cent and to ensure that credit growth continues to sustain economic growth.

The allocation for Defence is being increased to Rs 1,14,703 crore. This will include Rs 54,824 crore for capital expenditure.

A provision of Rs 95,579 crore for major subsidies including food, fertilizer and petroleum has been made in the Budget.

Gross Tax Revenue receipts at the existing rates of taxation are estimated at Rs 6,71293 crore and Centre's net tax revenue at Rs 5,00,096 crore. With revenue expenditure estimated at Rs 8,48,085 crore, the revenue deficit amounts to 4.0 per cent of GDP. Fiscal Deficit is estimated at Rs 3,32,835 crore which is 5.5 per cent of GDP. T

his would be lower than in 2008-09, but higher than would be appropriate under normal circumstances.

The minister explained: 'However, conditions in the year ahead are not likely to be normal and, therefore, the high fiscal deficit is inevitable. We will return to FRBM targets once the economy is restored to its recent trend growth path.'

Source: PIB

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