Foreign investors and Indian businesses expected major economic reforms in with regard to disinvestment, insurance, banking, retail, energy and defense.
Investors reacted sharply to the budget with a 5% fall in the BSE-benchmark Sensex.
Rural Employment and Rice Subsidy
The budget emphasized 'inclusive development' with focus on rural areas. It increased the spending of the government's flagship rural employment scheme, up 144 % from last year. The scheme, NREGA, received $8 billion in this fiscal year. The budget also called for a direct transfer of subsidies to farmers rather than providing a subsidy to producers.
Mukherjee also announced the enactment of the National Food Security Act to ensure entitlement of 25 kilo of rice or wheat per month at Rs.3 per kilo to every family living below the poverty line in rural or urban areas.
Budget Goals 2009-10
Mukherjee set a target of 9% growth. Last year India recorded 6.7 % growth down, from nine percent a year earlier and and the lowest since 2003. The economy had an average growth of 8.8% in the previous five years. Last week, a government-sponsored economic survey predicted 7.75 % growth this year.
The budget also reports 16-year high fiscal deficit - 6.8 % of GDP for the fiscal year to March 2009. Total spending in the 2009/10 budget will rise to 214 billion, up 36 % from 2008-09 year.
This article published in Canadian online magazine Orato.