The Finance Minister of India announced the interim Budget 2009 in Parliament. According to the acting Prime Minsiter cum finanace Minister Mr Pranab Mukherjee the United Progressive Alliance (UPA) had succeeded in implementing the promises outlined in the Common Minimum Programme (CMP). According to the FM achieving 7% growth rate on a sustained basis was one of the targets of the UPA and the country clocked above 9% growth rate for three consecutive years — FY06, FY07 and FY08.

In the interim budget, Pranab Mukherjee said the government have relaxed fiscal responsibility & budget management targets. There may be need to consider additional fiscal measures in the next regular budget. The government need to revert to the fiscal consolidation at the earliest.

He further added that there may be need for additional fiscal measures in the post elections budget. IIFCL given permission to raise Rs 10000 crore from market by March 09. It will be also given permission to raise Rs 30000 crore more if required. The Centre has been given in-principle approval under PPP mode projects worth Rs 67,700 crore.

Highlights of the Interim Budget 2009

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      All efforts made to deliver on commitments
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      Sustained growth over 9% in last 4 years
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      Per capita income grew 7.4% during UPA regime
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      Gross domestic savings rate at 37.7%, gross cap formation at 14.2%
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      Tax-GDP ratio at 12.5% in 2007-08, close to fiscal correction target
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      Domestic investment rate over 39% in FY08
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      Growth drivers - agriculture, services, manufacturing, construction
      Outlook for food grain production encouraging for coming year
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      Exports grew at annual average rate of 26.4% during last 4 years
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      Challenges related to capital inflows and global inflation
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      We have weathered the crisis, but no room for complacency
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      Moderate pass through of prices affected domestic inflation in '08
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      Dec industrial growth fell 2% (YoY)
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      Forecasts indicate that world economy may fare worse in 2009
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      India has been affected along with other slowing EM economies
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      GDP growth of 7.1% makes India second fastest growing economy
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      Fiscal pkgs announced provide tax relief to boost demand, spending
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      Have taken steps to encourage private investments in infra via PPP
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      Approved 37 infra projects worth Rs 70,000 cr between Aug 08-Jan 09
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      54 central infra proj of Rs 67700cr sent for final nod to PPP panel
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      Initiative for providing refinance to banks for long-term credit to proj
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      IIFCL can to raise Rs 10000 cr, nod for additional Rs 30000 cr
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      IIFCL to refinance 60% of the projects
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      Extension of export credit for labour intensive exports
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      FDI inflow of USD 23.3 billion during April-November 2008
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      Have relaxed fiscal responsibility & budget mgmt targets
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      May need to consider additional fiscal measures in next regular budget
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      Need to revert to fiscal consolidation at the earliest
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      Economic regulatory and oversight systems have to be more efficient
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      Attention given to agriculture sector, plan allocation up 300% in 4 yrs
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      Agri - govt implementing revival pkg in 25 states worth Rs 13500 cr
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      Agri - govt will continue to provide interest subvention for FY10
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      Farm debt waiver of Rs 65,300 cr covering 36 million homes
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      Govt to provide interest subsidy to farmers in FY10
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      Outlay on higher education up 900% in 11th 5-year plan
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      Annual ad-hoc grants have been increased by 50% (YoY)
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      Tax rates must fall during times of crisis
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      FY09 revised estimates of spending at Rs 9.9 lakh cr vs Rs 7.5 lakh cr
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      FY09 plan expenditure revised to Rs 2.8 lakh cr