The Union budget 2009-10 is an important milestone in restoring India on the 9% growth path overtime.The immediate concern is to minimize the impact of recession. So the budget focuses on sustained growth while defending against recession. The economic survey 2009 points out that the important slow down over the year 2008-09 was in private consumption and investment. Clearly the overall budget is expendirure driven, given the need to provide a big push to private consumption.The government has increased the budgeted expenditure by 36% which will provide a boost to consumption.It continues to build the economy on the strength of domestic consumption and investment, given the external demand is uncertain.With tax revenue expected to rise only 2%,expenditure is stated to go up by13%,the finance minister projected a fiscal deficit of 6.8% of the GDP for 2009-10,the highest in the last sixteen years. It is expected that fiscal deficit will come down with growth . Increased spending and consumption will stimulate demand which in turn stimulate economic growth..Higher growth accelerates revenue collection and lower fiscal deficit.Simultaneously it tries to carry forward inclusive growth to ensure balanced and equitable development.

The budget puts more money in the hands of individuals by cutting down taxes and increasing spending.At a time when the government is under severe presure to reduce fiscal deficit, the fringe benefit tax and the surcharge on personal income tax is abolished.The exemption limit for personal income tax is also raised.These measures will enhance the disposable income and stimulate spending.

The budget also seeks to stimulate the economy through increased government spending on agriculture, infrastructure,both rural and urban social security schemes and on flagship programmes. The enhanced emphasis on infrastructure shows the determination of the government to boost domestic demand.This will further incentivise industries in the medium term.The government is clearly expecting public private sector partnership(PPP) in the development of infrastructure.At the very core of the government’s plan for infrastructure is the India Infrastructure Finance Company (IIFCL)which will refinance 60%of the bank loans for all PPP projects in critical sectors over the next fifteen and eighteen months primarily through takeout financing . Mostly used in infrastructural project, this method of financing involves an agency like IIFCL buying out the infrastructural loans of the projects after a few years of disburesment. The IIFCL and banks are now in a position to support projects involving a total investment of 100 thousand crore in infrastructure. The Jawaharlal Nehru National Urban Renewal Mission ( JNNURM) is an important instrument for refocussing the attention of state governments on the importance of urban infrastructure.In recognition of the role of JNNURM, the allcation for this scheme is being stepped up by 87 % to Rs.12887 crore in the current budget.

The budget emphasizes inclusive growth towards maintaining domestic demand conditions especially in the rural sector.The budget allocation for rural infrastructure has been stepped up.Bharat Nirman with its six schemes is an important initiative for bridging the gap between the rural and urban areas and improving the quality of life of the rural poor,It is proposed to step the alllcation for Bharat Nirman by 45% in 2009-10 over the budget estimates of 2008.09.The budget allocation for rural roads and electrification component of the Bharat Nirman Programme is raised by 54% and 27.7% respectively.The allocation for Pradhan Mantri Gram Sadak Yojana,which is one of the most successful programme under Bharat Nirman is raised by 59% over 2008-09 to12000 crores. It is also proposed to allocate Rs. 7000 crores to Rajiv Gandhi Gramin vaidyutikaran Yojana which represents 27%increase over 2008-09.The allocation for housing component of Bharat Nirman,Indira Awass Yojana isis raised by 63% to 8800.

To broaden the pace of rural housing, it is proposed to allocate a sum of Rs. 2000 crores from the shortfall in priority lending of commercial banks for Rural Housing Fund in the National Housing Bank.This will boost the resource base of the NHB for its refinancing operations in the housing sector.It is also proposed to enhance the allocation for housing and provision for basic amenities to urban poor to Rs.3973 crores to improve their lot.This includes the provision for Rajiv Gandhi Awaas Yojana,anew scheme announced in the address of the president.Besides the the allocation for highways railways and power projects were also stepped up.

The large investments in infrastructure,both in urban and rural areas will create employment in infrastructure and related sectors.Increased investment on infrastructure has a strong multiplier effect and will stimulate consumption,Higher spending on highways,railways and housing plans for the urban poor will raise the demand for steel and will provide a big boost to these industries which are badly hit by the slow down.

To carry forward the process of inclusive growth,a new scheme called Pradhan Mantri Adarsh Gram Yojana is being launched this year on a pilot basis for integrated development of 1000 villages in which the population scheduled caste is about 50%.There are about 44000 such villages in India..An outlay of Rs.100 crores is allotted for this purpose.On the successful implementation of the pilot phase,the scheme will be extended in the coming year

The National Rural Employment Guarnatee Scheme implemented in February 2006 has been a significant success.It provided employmenmt to for more than 4.47 crore households.To increase the productivity of assets and resources under NREGA,convergence with other schemes relating to agriculture,forest,water resources,land resources and rural roads is initiated.Emphasis is also given in the budget for generating income through various schemes specially intended for the poor.The introduction of a new sheme called Rural Development and Poverty Alleviation Programme in selected areas on a pilot  basis  is bound  to raise  the standard of living of the rural poor.