Budget

2008-09
 What is a Budget?
 A budget is a plan to achieve a given objective or
objectives
 Budgeting is a formalised system of planning,
controlling and evaluating the use of resources.
 Budgets are detailed quantified financial plans of
action for a specific period in the future, both
for individual departments within the
organisation and the organisation as a whole.

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 Introduction

• The Indian Budget is a schematic plan of India's

financial and operational goals. It is an action plan
that facilitates allocation of resources in India. The
Government of India Budget, also known as
the Union Budget, is primarily made up of the
Revenue Budget and Capital Budget.
• Revenue Budget-Comprises of Government
revenue receipts like tax and expenditure met from
the revenue.
• Capital Budget-Comprises of capital receipts and
payments. The primary components of capital
receipts include loans brought up by Government of
India from public. The primary components of
capital payments include capital expenditure on
acquisition of assets like equipment, machinery,
land and buildings which also include transactions
in the Public Account and investments in shares.
 Finance Minister
• Mr. P. Chidambaram was the Finance
Minister in 2008-09.
• It was the 5th Budget in succession to be
presented by him under the UPA Government at
the centre.

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 Achievements Till 2008

• GDP- maintained at an avg. of 8.8% .

• Manufacturing-9.4%.

• Services-10.7%.

• Agriculture-operating under ups and downs.

• Inflation has been maintained at moderate levels.

• Government is working on Bharat Nirman and other

Flagship Programmes.
 Outlook of Budget 2008-09

Chief Areas:
 Social Initiatives

 Agriculture

 Infrastructure

 Budget Estimates

 Tax Proposal

 Other Proposals

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 Social Initiatives
• Bharat Nirman -Increase of 27.1% from previous
year to Rs.31,280 crore.
• Education & Health Sector – Increase of 20%
and 15%.
• Sarva Shiksha Abhiyan(SSA) and Mid day
meal- SSA to Rs.13,100 crore and Rs.8,000
crore to mid day meal scheme.
• Schemes for secondary education to be provided
Rs. 4,554 crore.

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• Means Cum Merit Scholarships – 100,000 scholarships
will be awarded under this. A corpus fund of Rs750 crore has
been created.
• Polio- Rs. 1,042 crore
• HIV/AIDS- Rs.993 crore
• Health-National Rural Health Mission(2nd year)
• Integrated Child Development Services(ICDS) -
Rs.6,300 crore, Anganwadi workers Rs. 1500/month.
• National Rural Employment Guarantee
Scheme(NREGS)- Rs.16,000 crore

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 Agriculture
• Farm Credit-Rs.280,000 crore. Short-term crop
loans continue to be disbursed at 7 per cent
per annum and an initial provision of Rs.1,600
crore for interest subvention.
• Plantation-Special Tea Fund launched Rs 40 crore.
Similar provision for cardamom(Rs.10.68 crore)
rubber (Rs.19.41 crore) and coffee (Rs.18 crore).
• Training of farmers- with total estimate of Rs.100
crore in association with Indian Council of
Agricultural Research(ICAR).

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 • NABARD- provides refinance to cooperative
institutions .
• Agricultural Insurance-Rs. 644 crore
• Debt Waiver and Debt Relief-For marginal
farmers (i.e., holding upto 1 hectare) and small
farmers (1-2 hectare), complete waiver of all loans
that were overdue on December 31, 2007

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 Infrastructure
• Rural Infrastructure Development Fund- A corpus
fund provided with Rs.4,000 crore which increases to
Rs.14,000 crore in total.
• Accelerated Power Development and Reforms Project
(APDRP) gets Rs.800 crore as compared to Rs.650 crore
last year.
• Rajiv Gandhi Grameen Vidyutikaran Yojana gets Rs.5,500
crore , an increase of Rs.1517 crore.
• National Highway Development Programme (NHDP) saw
an increase from Rs.10,867 crore in 2007-08 to Rs.12,966
crore this year.

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 Services Sector
• Merchandise Exports exceeded the
Government estimates. Thus , Government
decided to follow export friendly policies
relief was given to exporters amounting to
over Rs.8,000 crore.

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 Other Proposals
• Defence Allocation increased to Rs.105,600 crore
• Public Distribution System: Rs.32,667 crore for food
subsidy under PDS scheme
• Skill Development Mission: Rs,15,000 crore
• Backward Regions Grant Fund: Allocation of
Rs.5800 crore
• Commonwealth Games: to be provided Rs.624 crore

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BUDGET ESTIMATES FOR 2008-09

2007- 2007- 2008-

2008 2008 2009
(in crore) Estimates Actuals Estimates
Revenue Reciepts 486422 525098 602935
Capital Reciepts 194099 184275 147949
TOTAL 680521 709373 750884

Non Plan Expenditure 475421 501849 507498

Plan Expenditure 205100 207524 243386
TOTAL 680521 709373 750884

Revenue Deficit 71478 63488 55184

Capital Deficit 150948 143653 133287
Primary Deficit -8047 -28318 -57520

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 Tax Proposal
• Tax to GDP ratio was 9.2 per cent in 2003-04, set to rise to 12.5 per
cent at the end of 2007-08.
Indirect Tax:
Custom Duties
 to be reduced from 10 per cent to 5 per cent on certain specified life
saving drugs.
 reduced on steel melting scrap and aluminum scrap from 5 per cent
to nil.
 removed on helicopter simulators to facilitate training of helicopter
pilots
 Specified parts of set top boxes for use in the IT/electronic hardware
industry to be exempted from customs duty.

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 Excise Duty
 on all goods produced in the pharmaceutical sector
reduced from 16 per cent to 8 per cent.
 on buses and their chassis from 16 per cent to 12 percent.
 small cars, two wheelers and three wheelers from 16 per
cent to 12 percent.
 Anti AIDS drug, Atazanavir, as well as bulk drugs for its
manufacture are to be exempted from excise duty.
 increased on packaged software from 8 per cent to 12 per
cent

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 Direct Tax
• For individuals
Upto Rs.150,000 NIL

Rs.150,000 – 300000 10 %
Rs.300,000 – 500000 20 %
Above Rs.500,000 30 %

• For senor citizens the threshold limit increased from

Rs.195,000 to Rs.225,000
• For Women tax payers the threshold limit increased
from Rs.145,000 to Rs. 180,000

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 Conclusion
“We are very keen to do more in these areas but we have
our resource constraints. So we cannot do everything at
one go.”
Manmohan Singh, Economic Times, March 1

“Generous grants, compression, righteous rule and

succour to the downtrodden are the hallmarks of good
governance.”

P. Chidamabaram in his Budget speech

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