Indias annual budget for 2008-09 presented; focus on defence and social sectors


New Delhi : Indias annual budget for the 2008-09 was announced Friday with major amount of money being allocated to the countrys defence, education, health and agriculture sectors.

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Announcing the budget in the Indian Parliament here today, Finance Minister P Chidambaram said defence budget was increased by 10 per cent to 26.5 bn usd and added that more money would be provided if required.

Indias Defense Minister A K Antony has welcomed the 10 per cent hike.”I am happy. The Finance Minister said that more money would be provided, if required, particularly for capital expenditure. This will help the modernisation drive of the armed forces,” he told reporters after the presentation of the budget.

On the overall government accounting, the Finance Minister said that the Revenue Deficit for the year would be at 1.4 per cent as compared to the target of 1.5 per cent for the year 2007-08.

Similarly, the fiscal deficit for the year is expected to settle at 3.1 per cent as compared to the budgeted target of 3.3 per cent. For the next year, he has budgeted a Revenue Deficit of one per cent and a Fiscal Deficit of 2.5 per cent.

In a major relief for Indian farmers, Chidambaram announced 15 billion usd relief package, including complete waiver of loans given to small and marginal farmers. Nearly 30 million Indian farmers were expected to benefit from the announcement.

For the Indian salaried class, Chidambaram proposed to increase the income tax exemption limits and increased the education budget by 20 per cent to 8.35 bn usd and said that the National Rural Employment Guarantee Scheme would be extended to all 596 rural districts of the country.

Health allocation in the budget was increased by 15 per cent to 4.13 bn usd with particular stress on HIV/AIDS, polio and healthcare for the rural and urban poor. The Minister said that Indias export target of 160 billion usd in 2007-08 might not be achieved due to the rising rupee against the dollar in the past year. The government would provide relief to exporters adversely hit by appreciation of the Indian Rupee against the dollar, he added. “Merchandise exports have come under some pressure due to the appreciation of the rupee” although the growth rate was strong at 21.8 percent during April-Dec 2007-08,” he said.

“This Budget will stimulate investment and growth and that growth will create wealth… The economy is growing by 8 per cent, people are willing to pay taxes,” the Finance Minister said. Welcoming the budget as pro-agriculture and pro-investment, Indian Prime Minister Manmohan Singh said that the measures announced would address the problems of Indias farm sector and would lead to overall development of the economy.