Mukherjee Delivers Common Man’s Budget
Feb. 16 – India’s acting Finance Minister Mr. Pranab Mukherjee delivered the present government’s last budget today. The interim budget stayed on course satisfying the common man before elections this may. Highlights of the budget included tax waivers for farmers, a greater focus on infrastructure, an increase in the defense budget by 34 percent and a significantly higher fiscal deficit of 6 percent of GDP much higher than the initial target of 2.5 percent of GDP. The fiscal deficit for the fiscal year 2009/10 is expected to be slightly lower at 5.5 percent of GDP.
While no sweeping policy changes were made in the budget, it also didn’t announce any cuts in either direct or indirect taxes – a highly anticipated move. The budget instead suggested measures such as elevating literacy rates and jobs, increasing rural spending and subsiding food and fuel – measures that could improve the nation’s inclusive development. Thefull budget will be announced by July by which time the new governement will be sworn in.
The stock markets – both the Nifty and the Sensex nosedived during delivery of the speech as no announcement of a third stimulus package was announced. The government announced a revised estimate of spending Rs 11 trillion (US$227 billion) during 2008/09 as against an estimated total spending of Rs 9.53 trillion (UD$ 197 billion) in 2009/10.
Highlighting that Indian cannot remain immune to global financial crisis Mukerjee also stated that with a GDP growth of 7.1 percent in 2008/09 India was the second fastest growing economy. Exports increased by an annual average growth rate of 26.4 percent in US dollar terms during the term of the UPA government. Foreign trade also increased from 23.7 percent to 35.5 percent of GDP during the same period.