The budget is the annual announcement of the government’s fiscal policy changes. It announce the tax changes proposed for the following tax year and also how the government plan to spend the revenue.
It is an instrument for fulfilling the obligations of the states
It is a political statement of the priorities set by the government.
It shows the financial transaction of the year.
The economic survey of India is published by central statical organization.
Each year survey is conducted to show the status of economic scenario of the country.
The Economic Survey of India showcases the annual- economic development of the country.
It is scheduled to be presented on 2nd July, when the Budget Session of Parliament begins.
Union Budget sets goals and targets for the next one year, the Economic Survey focuses on the growth achieved the previous year and the factors that contributed to it.
It talks about the state of the economy while concentrating on selected economic indicators such as:-
State of the Economy
Challenges and policy response.
Fiscal Developments and Public Finance.
Price and Monetary management.
Agriculture & Food management.
Energy, Infrastructure and Communication.
Poverty and Human development.
Financial Intermediate and Markets.
STATE OF ECONOMY
GDP to grow to 7.5 per cent in 2009-10.
The overall growth of GDP at factor cost at constant prices in 2008-09, as per revised estimates released by the Central Statistical Organisation (CSO) (May 29, 2009) was 6.7 per cent.
Despite the slowdown in growth, investment remained relatively buoyant, growing at a rate higher than that of GDP
The overall rate of growth of capital information at constant price was 15.6 in 07-08 is compare to 13.9 in 06-07.
The index of industrial production for the year 2008-09 points towards a sharp slowdown with growth being placed at 2.4 per cent.
Challenges and policy response. During the last two years the Indian economy faced three major challenges-
Increase the capital inflow which reached to maximum in the last quarter of 2007-08.
An inflationary explosion in global commodity prices.
Global financial meltdown and collapse of international trade.
FISCAL DEVELOPMENT AND PUBLIC FINANCE Fiscal consolidation began in the early 1990. with fiscal deficit declining from 6.6% for GDP in 1990-91 to 4.1% of GDP in 1996-97 and it reached to 6.2% of GDP in 2001-02.
The growth of industrial sector started to slowdown in the first half of 2007-08.
Overall growth during the year remained as high as 8.5%.
The year 2008-09 thus closed with the industrial growth at only 2.4% as per the index of industrial production(IIP).
AGRICULTURE AND FOOD MANAGEMENT
The performance of the agricultural sector influence the growth of Indian economy.
Agricultural sector contributed 12.2% of national exports in 2007-08.
Agricultural accounted for 17.8% of the GDP in 2007-08 as compared to 21.7% in 2003-04.
BUDGET AT A GLANCE
Total estimated expenditure is Rs.10,20,838crore, 36% more than previous.
Total estimated income is Rs. 6,14,497crore.
Sustain rate of growth 9%p.a over an extended time.
Non tax revenue receipts estimated at Rs.1,40,279crore in 2009-10 compare to Rs.95,785crore in 2008-09.
INFRASTRUCTURE AND INDUSTRY
Inadequate infrastructure is responsible for pushing back India’s GDP by about 2%.
IIFCL will refinance 60% of bank loan in critical sectors.
Allocation of national highway authority of India for the national highway development programme increased by 23%.
National Ganga Project allocation to go up to Rs 562 Crore.
AGRICULTURE Target for agriculture credit are Rs.3,25,000 crore for year 2009-10. For farmers loans upto 3 lakh at 7% p.a. Agriculture sector has grown by 2.4%. Record rice production at 98.04 million tonnes. 14 national agricultural projects approved. Central assistance for storm water drainage project increase to Rs.500 crore from 200 crore. Rajeev Gandhi Krishi vikas yojana allocation up by 30%.
Overall plan expenditure for education sector in budget 2009-10 is 3.25 lakh crore.
This is 34% up from the previous year.
2,113 crore to set upto more IITs and IIMs.
Interest subsidy on loans for higher education.
Rs. 827 crore allocated for opening one central university in each uncovered state.
Spending on higher education raised to Rs.2010 crore.
OIL AND GAS
Bio-diesel custom duty lowered.
To develop and set up national gas grid.
Domestic oil prices should be in sync with global crude.
Tax incentives will be provided on capital expenditure on the laying and operating of cross country natural gas, crude or in pipe line networks for excise duty on naphtha reduced to 14%.
In National Rural Health Mission(NRHM) to increase of Rs.2,057 crore.
Pradhan Mantri Adarsh Gram Yojna has been initiated for integrated development of 1000 villages allocation Rs.100 crore.
Allocation under Rajiv Gandhi Gram Vidyutikaran yojna is up by 27% to Rs.7000 crore.
Expenditure on Indira Awas Yojna by 63% to Rs.8800 crore.
DEVELOPMENT OF MEGA-CLUSTERS In order to scale up both infrastructure and production, it is proposed to take up six centres for development as mega-clusters.
Varanasi and Sibsagar will be taken up for handlooms.
Bhiwani and Erode for powerlooms.
And Narsapur and Moradabad for handicrafts.
Each mega-cluster will require about Rs.70 crore.
Surcharge of 10% on personal income tax removed.
Custom duty reduced from 10% to5% on 10 specific life saving drugs.
Excise duty on branded articles of jewellery to be reduced from 2% to nil.
Excise duty on special boiling point spirit to be reduced to 14%.
All BPL families to be covered under Rashtriya Swasthya Bima Yojana(RSBY). Allocation under RSBY increased by 40% over previous allocation to Rs.350 crore in 2009-10.
Allocation under National Rural Health Mission increase by Rs.2057 crore.
SPORTS AND POWER
In Commonwealth games 2010 outlay to be stepped up from Rs.2112 crore in Interim Budget to Rs.3472 crore in regular budget 2009-10.
Allocation under Accelerated power development and reform programme increase by 16% to Rs.2080 crore.
HIGHLIGHTS OF RAILWAY BUDGET
Railways has generated the revenue of 90,000 crore in last 5 years.
The India Railway has expenditure 81685 crore.
Development of Rail facility in Jammu and Kashmir.
For ordinary passenger trains there is reduction in passenger fares by Rupee 1 for fares costing up to Rs 50 per passenger for journey above 10 km.
For all mail/express and ordinary passenger trains, second class and sleeper class fares are to be reduced by 2 per cent for tickets costing Rs 50 and more per passenger.
Also there is to be a fare Reduction of 2 per cent for AC First Class, AC II tier, AC III tier and AC Chair Car.
NEW PASSENGER SERVICES:
43 new train services to be started in 2009-10.
Extension of 14 trains envisaged.
Frequency of 14 trains is to be increased.
New lines to be introduced
Gauge conversion at Chhindwara, Ahmedpur and Naghbir
Doubling at Tala, Secunderabad, Sahibganj, Ara, Ghumani, Hissar, Dankuni, Bibinagar, Krishnanagar, Rajkot, Bandel and Jhansi.
Seven nursing college to be set up on railway land in places including Delhi, Kolkata & Mumbai.
50 stations to be upgrade to world class standards.
49 stations to be developed at pilgrim centers.
Multi-functional complexes with shopping malls, food stalls, medicines and variety stores in different parts of the country.
Mega logistics hubs in Eastern and Western corridors
Colleges on Rail land on Public-Private Partnership.
To set up 1000 MW power plant.
309 out of 375 stations will be developed with modern facilities .
Cold storage facilities for farmers to store products
CONCLUSION There have been muted references to disinvestment and banking reforms. The FDI scenario has been left largely unchanged while reforms in the education and insurance sector have not been mentioned extensively. On the positive side this budget has been very good to the rural sector and this is the single biggest impact of this budget. The National Rural Employment Guarantee Scheme has been allotted more funds to make it a bigger success.
There have been extra funds allotted towards rural housing as well. The farm loan waiver has been extended till the end of the year which is going to be helpful for farmers unable to pay back their loans even this year due to the weak monsoon. Global economics have played a large part in this budget. It has been the single biggest determinant of revenue economics for this fiscal. The FM has pretty much decided that reforms cannot be pushed until and unless the global economic crisis is over.
The rural reforms are excellent but at the cost of urban reforms is disappointing. Important areas like banking and insurance have been ignored. But this budget has emerged as part of the present government’s long term roadmap for the economy.