The 2009
Union budget of India
The Union Budget of India, also referred to as the ''Annual Financial Statement'' in Article 112 of the Constitution of India, is the annual budget of the Republic of India. The Government presents it on the first day of February so that it coul ...
was presented by the
finance minister
A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation.
A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...
,
Pranab Mukherjee
Dr. Pranab Mukherjee (11 December 193531 August 2020) was an Indian politician and statesman who served as the 13th president of India from 2012 until 2017. In a political career spanning five decades, Mukherjee was a senior leader in the India ...
, on 6 July 2009.
Background
During 2008–09, the growth rate of
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
of India fell from an average of over 9% in the previous three fiscal years to 6.7%. The
wholesale price index
The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries (like the Philippines) use WPI changes as a central measure of inflation. But now India has adopted new CPI to measure inflation. However, ...
of India also witnessed large fluctuations between 13% in August 2008 to 0% in March 2009. The
fiscal deficit
The government budget balance, also alternatively referred to as general government balance, public budget balance, or public fiscal balance, is the overall difference between government revenues and spending. A positive balance is called a ''g ...
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
The government budget balance, also alternatively referred to as general government balance, public budget balance, or public fiscal balance, is the overall difference between government revenues and spending. A positive balance is called a ''g ...
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 receipts at 1,40,279.
Short term economic revival measures
Infrastructure development
* Allocation of 15,800 crore to
National Highways Authority of India
The National Highways Authority of India or NHAI (Hindi: भारतीय राष्ट्रीय राजमार्ग प्राधिकरण) is an autonomous agency of the Government of India, set up in 1995 (Act 1988) and i ...
.
* Allocation of 12,887 crore to
Jawaharlal Nehru National Urban Renewal Mission
Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was a massive city-modernization scheme launched by the Government of India under the Ministry of Urban Development. It envisaged a total investment of over $20 billion over seven years. ...
.
* 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 .
* 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 of 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
The poverty threshold, poverty limit, poverty line or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for t ...
in rural or urban areas.
* Allocation of 12,000 crore to
Pradhan Mantri Gram Sadak Yojana
The Pradhan Mantri Gram Sadak Yojana (PMGSY) () is a nationwide plan in India to provide good all-weather road connectivity to unconnected villages. Of 178,000 (1.7 lakh) habitations with a population of above 500 in the plains and above 250 i ...
and 7,000 crore to
Rajiv Gandhi Grameen Vidyutikaran Yojana
Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) or Rural Electricity Infrastructure and Household Electrification Scheme was launched in 2005 with the aim to provide electricity to all rural areas.
In 2013, an amount of Rs. 198.98 crore was sanc ...
.
* Allocation of 8,800 crore to
Indira Awaas Yojana 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 recognised institutions in India
* Plan outlay of
Ministry of Minority Affairs
The Ministry of Minority Affairs is the ministry in the Government of India which was carved out of the Ministry of Social Justice and Empowerment and created on 29 January 2006. It is the apex body for the central government's regulatory and ...
enhanced to 1,740 crore.
* 75 corers allocated for establishing three campuses for
Aligarh Muslim University
* Setting up of
handloom
A loom is a device used to weave cloth and tapestry. The basic purpose of any loom is to hold the warp threads under tension to facilitate the interweaving of the weft threads. The precise shape of the loom and its mechanics may vary, but t ...
mega clusters in
West Bengal
West Bengal (, Bengali: ''Poshchim Bongo'', , abbr. WB) is a state in the eastern portion of India. It is situated along the Bay of Bengal, along with a population of over 91 million inhabitants within an area of . West Bengal is the fou ...
and
Tamil Nadu
Tamil Nadu (; , TN) is a state in southern India. It is the tenth largest Indian state by area and the sixth largest by population. Its capital and largest city is Chennai. Tamil Nadu is the home of the Tamil people, whose Tamil language ...
,
powerloom mega cluster in
Rajasthan
Rajasthan (; lit. 'Land of Kings') is a state in northern India. It covers or 10.4 per cent of India's total geographical area. It is the largest Indian state by area and the seventh largest by population. It is on India's northwestern s ...
and mega clusters for carpets in
Srinagar and
Mirzapur
* Allocation of 12,070 crore to
National Rural Health Mission
The National Health Mission (NHM) was launched by the government of India in 2005 subsuming the National Rural Health Mission and National Urban Health Mission. It was further extended in March 2018, to continue until March 2020. It is headed b ...
* 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 (NGRBA) is a financing, planning, implementing, monitoring and coordinating authority for the Ganges River, functioning under the Jal Shakti ministry of India. The mission of the organisation is to safeguard t ...
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
The Indian Council of Forestry Research and Education (ICFRE) is an autonomous organisation or governmental agency under the Ministry of Environment and Forests, Government of India. Headquartered in Dehradun, its functions are to conduct fore ...
,
Dehradun
Building Accountable Institutions
*
Unique Identification Authority of India
Aadhaar ( hi, आधार, ādhār, lit=base, foundation, bn, আধার) is a 12-digit unique identity number that can be obtained voluntarily by the citizens of India and resident foreign nationals who have spent over 182 days in twelve ...
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.
* 827 crore allocated for opening one Central University in each uncovered State.
* 50 crore allocated for
Punjab University,
Chandigarh
Chandigarh () is a planned city in India. Chandigarh is bordered by the state of Punjab to the west and the south, and by the state of Haryana to the east. It constitutes the bulk of the Chandigarh Capital Region or Greater Chandigarh, which a ...
* Outlay for
Commonwealth games
The Commonwealth Games, often referred to as the Friendly Games or simply the Comm Games, are a quadrennial international multi-sport event among athletes from the Commonwealth of Nations. The event was first held in 1930, and, with the exce ...
2010 increased to 3,472 crore.
* 500 crore allocated for rehabilitation of
Sri Lankan Tamils.
* 2,113 crore allocated for
IITs
The Indian Institutes of Technology (IITs) are central government owned public technical institutes located across India. They are under the ownership of the Ministry of Education of the Government of India. They are governed by the Instit ...
and
NITs
The National Institutes of Technology (NITs) are the central government-owned-public technical institutes under the ownership of Ministry of Education, Government of India. They are governed by the National Institutes of Technology, Science ...
* 1,000 crore allocated rebuilding the damaged infrastructure caused due to
cyclone Aila
Severe Cyclonic Storm Aila (JTWC designation: 02B) was the second named tropical cyclone of the 2009 North Indian Ocean cyclone season. Warned by both the Regional Specialized Meteorological Center (RMSC) and Joint Typhoon Warning Center (JTWC) ...
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.
* Elimination 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 was a tax previously imposed by the Indian Government on Indian companies according to the dividend paid to a company's investors. The dividend distribution tax has been abolished since 2020 according to the Union Budget o ...
* 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 box
A set-top box (STB), also colloquially known as a cable box and historically television decoder, is an information appliance device that generally contains a TV-tuner input and displays output to a television set and an external source of si ...
es
* Reduction of basic customs duty of
LCD panel
A liquid-crystal display (LCD) is a flat-panel display or other electronically modulated optical device that uses the light-modulating properties of liquid crystals combined with polarizers. Liquid crystals do not emit light directly but i ...
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
An ''ad valorem'' tax (Latin for "according to value") is a tax whose amount is based on the value of a transaction or of property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ...
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 Organisations
Federation of Indian Export Organisations (FIEO) is the apex trade promotion organisation in India set up by the Ministry of Commerce and Industry (India), Ministry of Commerce, Government of India, and the private trade and industry segment in ...
.
* Extension of service tax to goods carried by
Indian Railways
Indian Railways (IR) is a statutory body under the ownership of Ministry of Railways, Government of India that operates India's national railway system. It manages the fourth largest national railway system in the world by size, with a tota ...
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’
Reactions
Political parties
Bharatiya Janata Party
The Bharatiya Janata Party (BJP; ; ) is a political party in India, and one of the two major Indian political parties alongside the Indian National Congress. Since 2014, it has been the ruling political party in India under Narendra Mod ...
(BJP) president
Rajnath Singh
Rajnath Singh (; born 10 July 1951) is an Indian politician serving as the Defence Minister of India. He is currently the Deputy Leader of the House Lok Sabha. He is the former President of Bharatiya Janata Party. He has previously served as ...
criticised the budget, claiming that the government failed to fulfil the people's expectations. BJP leader
Venkaiah Naidu
Muppavarapu Venkaiah Naidu (born 1 July 1949) is an Indian politician who served as the 13th vice president of India from 2017 to 2022. He is the first Indian vice president born in independent India. He has also served as the minister of Hous ...
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)
The Communist Party of India (Marxist) (abbreviated as CPI(M)/CPIM/CPM) is a Marxist–Leninist communist political party in India. It is the largest communist party of India in terms of membership and electoral seats and one of the na ...
(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.
Communist Party of India (CPI) leader
Gurudas Dasgupta
Gurudas Dasgupta (3 November 1936 – 31 October 2019) was an Indian politician and a leader of the Communist Party of India. In the 1950s and 60s, he held several offices as a student leader. Later he was a member of Rajya Sabha for three term ...
criticised the projected economic growth as 'utopian'.
RJD
The Rashtriya Janata Dal ( RJD; translation: ''National People's Party'') is an Indian political party, based in the states of Bihar, Jharkhand and Kerala. The party was founded in 1997 by Lalu Prasad Yadav.
The party's support base has tradit ...
chief
Lalu Prasad Yadav
Lalu Prasad Yadav (born 11 June 1948) is an Indian politician and president of the Rashtriya Janata Dal (RJD). He is a former Chief Minister of Bihar (1990-1997), a former Railway Minister of India (2004-2009), and a former Member of Parlia ...
described the Budget as balanced but criticised it for not providing funds for reconstruction of
Bihar
Bihar (; ) is a state in eastern India. It is the 2nd largest state by population in 2019, 12th largest by area of , and 14th largest by GDP in 2021. Bihar borders Uttar Pradesh to its west, Nepal to the north, the northern part of West ...
following the
floods in Kosi.
Industry
The
Confederation of Indian Industry welcomed the budget, claiming that many of their recommendations were implemented.
NASSCOM
The National Association of Software and Service Companies (NASSCOM) is an Indian non-governmental trade association and advocacy group, focused mainly on the technology industry of India. Established in 1988, NASSCOM is a non-profit organis ...
also welcomed the initiatives like modernisation of employment exchanges, the UIAD project, and smart cards for healthcare services. Sudip Nandy, CEO of
Aricent
Aricent was a global design and engineering services company. It was acquired by French-based company Altran in 2018 and renamed Altran North America in April 2019 and Altran Americas in early 2020. With Altran's acquisition by Capgemini, the ...
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 BSE SENSEX (also known as the S&P Bombay Stock Exchange Sensitive Index or simply SENSEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange. The 30 ...
, the benchmark index of the
Bombay Stock Exchange
BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange. It is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman, it is the oldest stock exchange i ...
, reacted adversely to the budget, falling over 869 points, a loss of 6.53%, the biggest fall on any budget day. And the
CNX Nifty
The NIFTY 50 is a benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange. It is one of the two main stock indices used in India, the other being th ...
index of the
National Stock Exchange fell by 258 points. The biggest impact was on banking stocks, with the sectoral index losing 8.17%
See also
Dream Budget
The 1997 Union Budget of India, also called the Dream Budget by the Indian media, was presented on February 28, 1997, by Finance Minister P. Chidambaram in the Deve Gowda government. The budget presented a road map for economic reforms in India a ...
References
External links
Government of India Union Budget and Economic Survey
{{DEFAULTSORT:2009 Union Budget Of India
Union budgets of India
Union Budget Of India, 2009
Manmohan Singh administration
Union budget of India
The Union Budget of India, also referred to as the ''Annual Financial Statement'' in Article 112 of the Constitution of India, is the annual budget of the Republic of India. The Government presents it on the first day of February so that it coul ...