2009 Union budget of India
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The 2009 Union budget of India
Union budget of India
The Union Budget of India, referred to as the annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India, presented each year on the last working day of February by the Finance Minister of India in Parliament...

was presented by the Finance minister
Finance minister
The finance minister is a cabinet position in a government.A minister of finance has many different jobs in a government. He or she helps form the government budget, stimulate the economy, and control finances...

, Pranab Mukherjee
Pranab Mukherjee
Pranab Kumar Mukherjee is the current Finance Minister of India and leader of the current Lok Sabha.Mukherjee is a senior member of the Cabinet Committees on Economic Affairs, Infrastructure, Parliamentary Affairs, Political Affairs, Prices, Security, Unique Identification Authority of India,...

 on 6 July 2009.

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
Wholesale price index
The Wholesale Price Index is the price of a representative basket of wholesale goods. Some countries use WPI changes as a central measure of inflation. However, United States now report a producer price index instead.The Wholesale Price Index or WPI is "the price of a representative basket of...

 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. The budget was preceded by an interim budget by Pranab Mukherjee on 16 Feb 2009.

Budget Estimates

The total estimated expenditure for 2009-10 was 10,20,838 crore, of which 6,95,689 crore was towards Non Plan and 3,25,149 crore towards Plan expenditure. Total estimated revenue was 6,19,842 crore, including revenue receipts of 6,14,497 and capital receipts of 5345 crores, excluding borrowings. The resulting fiscal deficit was 4,00,996 crore while revenue deficit was 2,82,735 crore.The gross tax receipts were budgeted at 6,41,079 crore and non-tax revenue
Non-tax revenue
Non-tax revenue or non-tax receipts are government revenue not generated from taxes. Examples include:* Aid from another level of government - for example, in the United States, federal grants may be considered non-tax revenue to the receiving states, and equalization payments* Aid from abroad *...

 receipts at 1,40,279.

Infrastructure development

  • Allocation of 15,800 crore to National Highways Authority of India
    National Highways Authority of India
    The National Highways Authority of India is an autonomous agency of the Government of India, responsible for management of a network of over 60,000 km of National Highways in India...

    .
  • Allocation of 12,887 crore to Jawaharlal Nehru National Urban Renewal Mission
    Jawaharlal Nehru National Urban Renewal Mission
    Jawaharlal Nehru National Urban Renewal Mission is a massive city modernisation scheme launched by the Government of India under Ministry of Urban Development. It envisages a total investment of over...

    .
  • Allocation of 3,973 crore for housing and provision of basic amenities to urban poor.
  • Allocation of 500 crore for Brihan Mumbai Storm Water Drainage Project
    Brihanmumbai Storm Water Disposal System
    The Brihanmumbai Stormwater Disposal System is a project planned to overhaul Mumbai's water drainage system. The estimated budget for implementing the project is Rs. 1,200 crore as of August 2005...

     .
  • Allocation of 2,080 crore for Accelerated Power Development and Reform Programme

Agriculture development

  • Allocation of 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.

Export growth restoration

  • Allocation for 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 31 March 2010.

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.

Inclusive development measures

  • Allocation of 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 3 per kilo to every family living below the poverty line in rural or urban areas.
  • Allocation of 12,000 crore to Pradhan Mantri Gram Sadak Yojana
    Pradhan Mantri Gram Sadak Yojana
    The Pradhan Mantri Gram Sadak Yojana or PMGSY is a nationwide plan in India to provide good all-weather road connectivity to unconnected villages...

     and 7,000 crore to Rajiv Gandhi Grameen Vidyutikaran Yojana.
  • Allocation of 8,800 crore to Indira Awaas Yojana
    Indira Awaas Yojana
    Indira Awaas Yojana is a Government of India social welfare programme to provide housing for the rural poor in India. The differentiation is made between rural poor and urban poor for a separate set of schemes operate for the urban poor...

     and 2,000 crore to Rural Housing Fund
  • Allocation of 100 crore to Pradhan Mantri Adarsh Gram Yojana.
  • Interest subsidy to poor households to be provided for loans up to 1 lakh.
  • Increase of Corpus of Rashtriya Mahila Kosh from 100 crore to 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
    Ministry of Minority Affairs
    The Ministry of Minority Affairs, a ministry of the Government of India established in 2006. It is the apex body for the central government's regulatory and developmental programmes for the minority communities in India, which include Muslims, Sikhs, Christians, Buddhists and Zoroastrians ...

     enhanced to 1,740 crore.75 corers allocated for establishing three campuses for Aligarh Muslim University
    Aligarh Muslim University
    Aligarh Muslim University ,is a residential academic university, established in 1875 by Sir Syed Ahmed Khan as Mohammedan Angelo-Oriental College and later granted the status of Central University by an Act of the Indian Parliament in 1920...

  • Setting up of handloom mega clusters in West Bengal
    West Bengal
    West Bengal is a state in the eastern region of India and is the nation's fourth-most populous. It is also the seventh-most populous sub-national entity in the world, with over 91 million inhabitants. A major agricultural producer, West Bengal is the sixth-largest contributor to India's GDP...

     and Tamil Nadu
    Tamil Nadu
    Tamil Nadu is one of the 28 states of India. Its capital and largest city is Chennai. Tamil Nadu lies in the southernmost part of the Indian Peninsula and is bordered by the union territory of Pondicherry, and the states of Kerala, Karnataka, and Andhra Pradesh...

    , powerloom mega cluster in Rajasthan
    Rajasthan
    Rājasthān the land of Rajasthanis, , is the largest state of the Republic of India by area. It is located in the northwest of India. It encompasses most of the area of the large, inhospitable Great Indian Desert , which has an edge paralleling the Sutlej-Indus river valley along its border with...

     and mega clusters for carpets in Srinagar
    Srinagar
    Srinagar is the summer seasonal capital of Jammu and Kashmir. It is situated in Kashmir Valley and lies on the banks of the Jhelum River, a tributary of the Indus. It is one of the largest cities in India not to have a Hindu majority. The city is famous for its gardens, lakes and houseboats...

     and Mirzapur
    Mirzapur
    Mirzapur is a city in the heart of North India, nearly 650 km between Delhi and Kolkata and also equidistant from Allahabad and Varanasi. Located in the state of Uttar Pradesh, Mirzapur has a population of a little over 205,264 and is renowned for its famous carpet and brassware industry...

  • Allocation of 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
    National Ganga River Basin Authority
    National Ganga River Basin Authority is a financing, planning, implementing, monitoring and coordinating authority for the Ganges River, functioning under the Ministry of Environment of India...

     and allocation of 562 crore for River and Lake Conservation Plans.
  • One-time grant of 100 crore for Indian Council of Forestry Research and Education
    Indian Council of Forestry Research and Education
    The Indian Council of Forestry Research and Education is an autonomous organization, or governmental agency, under the Ministry of Environment and Forests, Government of India. Its functions are to conduct forestry research; transfer the technologies developed to the states of India and other user...

    , Dehradun
    Dehradun
    - Geography :The Dehradun district has various types of physical geography from Himalayan mountains to Plains. Raiwala is the lowest point at 315 meters above sea level, and the highest points are within the Tiuni hills, rising to 3700 m above sea level...


Building Accountable Institutions

  • Unique Identification Authority of India
    Unique Identification Authority of India
    The Unique Identification Authority of India , is an agency of the Government of India responsible for implementing the AADHAAR scheme, a unique identification project. It was established in February 2009, and will own and operate the Unique Identification Number database...

     to set up online data base with identity and biometric details of Indian residents.430 crore provided to modernise police machinery in the States.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 2,100 crore.495 crore allocated to setting up and upgrading of polytechnics
    Institute of technology
    Institute of technology is a designation employed in a wide range of learning institutions awarding different types of degrees and operating often at variable levels of the educational system...

    .827 crore allocated for opening one Central University in each uncovered State.50 crore allocated for Punjab University
    Panjab University, Chandigarh
    Panjab University is one of the oldest universities in India. The university campus is residential, spread over an area of in sectors 14 and 25 of the city of Chandigarh...

    , Chandigarh
    Chandigarh
    Chandigarh is a union territory of India that serves as the capital of two states, Haryana and Punjab. The name Chandigarh translates as "The Fort of Chandi". The name is from an ancient temple called Chandi Mandir, devoted to the Hindu goddess Chandi, in the city...

  • Outlay for Commonwealth games
    Commonwealth Games
    The Commonwealth Games is an international, multi-sport event involving athletes from the Commonwealth of Nations. The event was first held in 1930 and takes place every four years....

     2010 increased to 3,472 crore.500 crore allocated for rehabilitation of Srilankan Tamils.2,113 crore allocated for IITs and NITs1,000 crore allocated rebuilding the damaged infrastructure caused due to cyclone Aila
    Cyclone Aila
    Cyclone Aila was the second tropical cyclone of the 2009 North Indian Ocean cyclone season...

     in West Bengal.

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 2,000 crore in a year.

Direct taxes

  • Increase of personal income tax exemption limit from 2.25 lakh to 2.40 lakh for senior citizens, from 1.80 lakh to 1.90 lakh for women tax payers and from 1.50 lakh to 1.60 lakh for all other categories of individual taxpayers.
  • Increase of the deduction under section 80-DD to 1 lakh from 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
    Dividend distribution tax
    Dividend distribution tax is the tax levied by the Indian Government on companies according to the dividend paid to a company's investors.At present the dividend distribution tax is 15% , according to the Union Budget 2007, India....

  • 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.

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 100 to 200 per ten grams for gold bars, from 250 to 500 per ten grams for gold jewellery and from 500 to 1000 per kg for silver.

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 15,000 from 20,000.
  • Reduction of excise duty for Petrol driven trucks from 20% to 8%.
  • Exemption of branded jewellery from excise duty.

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
    Indian Railways
    Indian Railways , abbreviated as IR , is a departmental undertaking of Government of India, which owns and operates most of India's rail transport. It is overseen by the Ministry of Railways of the Government of India....

     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’

Political parties

Bharatiya Janata Party
Bharatiya Janata Party
The Bharatiya Janata Party ,; translation: Indian People's Party) is one of the two major political parties in India, the other being the Indian National Congress. Established in 1980, it is India's second largest political party in terms of representation in the parliament...

 (BJP) president Rajnath Singh
Rajnath Singh
Rajnath Singh is a prominent Indian politician and who has served the country in many capacities. He was the Chief Minister of Uttar Pradesh, a Cabinet Minister in the NDA regime and became the National President of the Bharatiya Janata Party, which is the single largest Opposition party in India...

 criticized the budget, claiming that the government failed to fulfil the people's expectations. BJP leader Venkaiah Naidu
Venkaiah Naidu
M. Venkaiah Naidu is an Indian politician. From 2002 to 2004, he was the president of the Bharatiya Janata Party, which is currently the opposition party in the Parliament of India. He resigned on October 18, 2004 and was succeeded by L.K...

 described the Budget as "escapist" and alleged that no steps were taken to attract investment or to provide relief for farmers. Communist Party of India (Marxist)
Communist Party of India (Marxist)
The Communist Party of India is a political party in India. It has a strong presence in the states of Kerala, West Bengal and Tripura. As of 2011, CPI is leading the state government in Tripura. It leads the Left Front coalition of leftist parties in various states and the national parliament of...

 (CPM) leader Brinda Karat
Brinda Karat
Brinda Karat is a communist politician from India, elected to the Rajya Sabha as a Communist Party of India CPI member, on 11 April 2005 for West Bengal.In 2005, she became the first woman member of the CPI Politburo...

 termed the Budget as s pro-rich and claimed that there were no major allocations in health, education and food subsidy.Communist Party of India
Communist Party of India
The Communist Party of India is a national political party in India. In the Indian communist movement, there are different views on exactly when the Indian communist party was founded. The date maintained as the foundation day by CPI is 26 December 1925...

 (CPI) leader Gurudas Dasgupta
Gurudas Dasgupta
Gurudas Dasgupta is an Indian politician and a leader of the Communist Party of India. He became a member of the Rajya Sabha in 1985. He was elected the General Secretary of the All India Trade Union Congress in 2001. In 2004, He was elected to the 14th Lok Sabha from Panskura in West Bengal...

 criticized the projected economic growth as 'utopian'. RJD chief Lalu Prasad Yadav
Lalu Prasad Yadav
Lalu Prasad Yadav is an Indian politician from Bihar. He was the Minister of Railways from 2004 to 2009 in the ruling United Progressive Alliance government, and the President of the Rashtriya Janata Dal political party...

  described the Budget as balanced but criticized it for not providing funds for reconstruction of Bihar
Bihar
Bihar is a state in eastern India. It is the 12th largest state in terms of geographical size at and 3rd largest by population. Almost 58% of Biharis are below the age of 25, which is the highest proportion in India....

 following the floods in Kosi.

Industry

The Confederation of Indian Industry
Confederation of Indian Industry
The Confederation of Indian Industry is a non-government, not-for-profit, industry-led and industry-managed organisation, seeking to play a proactive role in India’s development process. The organisation works to create and sustain an environment conducive to the growth of industry in India,...

 welcomed the budget, claiming that many of their recommendations were implemented. NASSCOM
NASSCOM
The National Association of Software and Services Companies of IT software and services related activities for use of both the software developers as well as interested companies overseas....

 also welcomed the initiatives like modernization of employment exchanges, the UIAD project, and smart cards for healthcare services. Sudip Nandy, CEO of Aricent
Aricent
Aricent Group is a global innovation and technology services company. The company develops software and provides technology services to application, infrastructure, and service providers with operations in 19 countries worldwide....

 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. D Sucheth Rao of Neuland Laboratories claimed that the government has largely ignored the demands of the Pharma segment.

Share market

Sensex- the benchmark index of Bombay Stock Exchange
Bombay Stock Exchange
The Bombay Stock Exchange is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was 1.63 trillion as of December 2010, making it the 4th largest stock exchange in Asia and the 8th largest...

 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
S&P CNX Nifty
The Standard & Poor's CRISIL NSE Index 50 or S&P CNX Nifty nicknamed Nifty 50 or simply Nifty , is the leading index for large companies on the National Stock Exchange of India. The Nifty is a well diversified 50 stock index accounting for 23 sectors of the economy...

 of National Stock Exchange
National Stock Exchange of India
The National Stock Exchange is a stock exchange located at Mumbai, Maharashtra, India. It is the 9th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization...

fell by 258 points. The biggest impact was on banking stocks, with the sectoral index losing 8.17%

External links

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