The Interim Budget before the elections could not have been worse for India Inc. The markets cracked as the budget offered no relief for corporate India and Nifty ended below 2850. The following were the key highlights of the Interim Budget:
All efforts made to deliver on commitments
-Sustained growth at over 9% in last 4 years
-Per capita income grew 7.4% during UPA regime
-Gross domestic savings rate at 37.7%, gross capital formation at 14.2%
-Tax-GDP ratio at 12.5% in 2007-08, close to fiscal correction target
-Domestic investment rate over 39% in FY08
-Growth drivers - agriculture, services, manufacturing, construction
-Outlook for food grain production encouraging for coming year
-Exports grew at annual average rate of 26.4% during last 4 years
-Challenges related to capital inflows and global inflation
-Have weathered the crisis, but no room for complacency
-Moderate pass through of prices affected domestic inflation in 2008
-December industrial growth fell 2% (YoY)
-Forecasts indicate that world economy may fare worse in 2009
-India has been affected along with other slowing EM (emerging markets) economies
-GDP growth of 7.1% makes India the second fastest growing economy
-Fiscal packages announced provide tax relief to boost demand, spending
-Have taken steps to encourage private investments in infrastructure via PPP
-Approved 37 infrastructure projects worth Rs 70,000 crore between August 08-January 09
-54 central infrastructure projects of Rs 67700 crore sent for final nod to PPP panel
-Initiative for providing refinance to banks for long-term credit to project
-IIFCL to raise Rs 10000 crore, has approval for an additional Rs 30000 crore
-IIFCL to refinance 60% of their projects
-Extension of export credit for labour intensive exports
-FDI inflow at USD 23.3 billion during April-November 2008
-Have relaxed fiscal responsibility and budget management targets
-May need to consider additional fiscal measures in next regular budget
-Need to revert to fiscal consolidation at the earliest
-Economic regulatory and oversight systems have to be more efficient
-Attention given to agriculture sector, plan allocation up 300% in 4 years
-Government implementing revival agriculture package in 25 states worth Rs 13500 crore
-Government will continue to provide interest subvention for agriculture in FY10
-Farm debt waiver of Rs 65,300 crores covering 36 million homes
-Government to provide interest subsidy to farmers in FY10
-Outlay on higher education up 900% in 11th 5-year plan
-Annual ad-hoc grants have been increased by 50% (YoY)
-Tax rates must fall during times of crisis
-FY09 revised estimates of spending at Rs 9 lakh crore vs Rs 7.5 lakh crore
-FY09 plan expenditure revised to Rs 2.8 lakh crore from Rs 2.4 lakh crore
-Government revises FY09 fertiliser subsidy to Rs 44863 crore
-FY09 food subsidy revised to Rs 10960 crore
-FY09 fiscal deficit seen at 6% of GDP versus estimate of 2.5%
-FY09 revenue deficit at 4.4% of GDP versus estimate of 1%
-FY10 spending seen at Rs 9.53 lakh crore
-FY10 budgetary support seen at Rs 2.85 lakh crore
-Rural jobs scheme to get Rs 30100 crore in FY10
-JNNURM spending seen at Rs 11842 crore for FY10
-Allocation of Rs 40900 crore for Bharat Nirman Scheme
-Interest subvention for some export loans extended
-Budget plan spending may have to be upped substantially post polls
-Additional plan expenditure has to increase by 0.5-1% post polls
-FY10 non-plan spend est at Rs 6.68 lakh crore
-Major subsidy spending for FY10 seen at Rs 95,500 crore
-FY10 budget revenue deficit seen at 4%, fiscal deficit at 5.5%
-FY10 gross tax revenue seen at Rs 6.71 lk crore
-Allocation of Rs 8,000 crore for mid-day meal scheme
- Rs 13,100 crore allocated for elementary education
-Interest subvention for some export loans extended
-Budget plan spending may have to be upped substantially post polls
-Additional plan expenditure has to increase by 0.5-1% post polls
-FY10 non-plan spend est at Rs 6.68 lakh crore
-Major subsidy spending for FY10 seen at Rs 95,500 crore
-FY10 budget revenue deficit seen at 4%, fiscal deficit at 5.5%
-FY10 gross tax revenue seen at Rs 6.71 lakh cr
-FY10 gross market borrowing seen at Rs 3.2-3.3 lakh cr
-No tax changes in interim budget
Source: India Budget
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