HIGHLIGHTS-India's interim budget for fiscal year 2009/10

NEW DELHI, Feb 16 (Reuters) - India's acting Finance
Minister Pranab Mukherjee presented on Monday the government's
interim budget for the 2009/10 fiscal year, weeks ahead of a
general election due by May.

The government projected spending may have to jump later
this year to shield the economy from a global slump and stem
job losses, fueling fears of a spiralling fiscal deficit that
is headed for a seven-year high.

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Following are highlights from the budget. The entire text
can be seen at indiabudget.nic.in. and
finmin.nic.in
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COMMENTS ON ECONOMIC SITUATION:

* "Conditions in the year ahead are not likely to be normal
and, therefore, the high fiscal deficit is inevitable. We will
return to (fiscal) targets once the economy is restored to its
recent trend growth path."

* "Extraordinary economic circumstances merit extraordinary
measures. Now is the time for such measures.

"Our government decided to relax FRBM (Fiscal
Responsibility and Budget Management Act) targets in order to
provide much needed demand boost to counter the situation
created by the global financial meltdown.

"Indeed, depending on the response of the domestic economy
and the revival of the global economy, there may be a need to
consider additional fiscal measures when the regular budget is
presented by the new government after the elections.

" However, the medium term objective must be to revert to
the path of fiscal consolidation at the earliest."

* "Since the scope for revenue mobilisation is bound to be
limited in a period of economic slowdown, any increase in plan
expenditure will increase the fiscal deficit.

"Indeed, we may have to consider additional plan
expenditure of anything from 0.5 percent to 1.0 percent of the
GDP and gear up our systems accordingly."

* "The recent developments have also brought out the need
for accelerating the pace of policy reforms, including in the
financial sector, to make the economy more competitive.

"The economic regulatory and oversight systems have to be
made more efficient and effective to bring the economy back to
the 9 percent growth path at the earliest."
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ESTIMATES FOR 2009/10 :

* Total expenditure seen at 9.532 trillion rupees ($195
billion)

* Plan expenditure seen at 2.851 trillion rupees

* Non-plan expenditure seen at 6.681 trillion rupees

* Defence allocation increased to 1.417 trillion rupees

* Food, fertilizer and petroleum subsidies seen at 955.79
billion rupees.

* Gross budgetary support seen at 2.85 trillion rupees

* Total tax receipts, at current taxation levels, seen at
6.713 trillion rupees

* Net tax revenue seen at 5 trillion rupees

* Corporate tax receipts seen at 2.44 trillion rupees

* Income tax receipts seen at 1.35 trillion rupees

* Excise receipts seen at 1.11 trillion rupees

* Customs duty receipts seen at 1.10 trillion rupees

* Tax-to-GDP ration estimated at 11.1 percent, rising to
14.4 percent in 2010/11 and 15 percent in 2011/12

* Revenue expenditure seen at 8.481 trillion rupees

* Revenue deficit seen at 4 percent of GDP. Hopes to wipe
out revenue deficit by 2010/11

* Fiscal deficit seen at 5.5 percent of GDP.

* Gross market borrowing seen at 3.62 trillion rupees

* Net market borrowing seen at 3.09 trillion rupees

* Expects to raise 11.2 billion rupees from stake sales

* Profits, dividends from state-run firms seen at 369.85
billion rupees
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POLICY MEASURES ANNOUNCED for 2009/10:

* Extends interest subsidy of 2 percent on pre- and post-
shipment credit for textiles, carpets, leather, gem &
jewellery, marine products and small and medium enterprises,
till Sept. 30, 2009

* To recapitalise public sector banks over next two years
to help maintain capital to risk weighted assets ratio (CRAR)
of 12 percent

* To continue providing farmers interest subsidy for
short-term crop loans upto 300,000 rupees at 7 percent per year

* Social security nets need to be strengthened.

* Rural job schemes to get 301 billion rupees in 2009/10.

* Rural health spending 120.7 billion rupees.

* Midday meals scheme for schools to cost 80 billion
rupees.

* Urban renewal spending in 2009/10 at 118.4 billion
rupees.

* Rural sanitation spending seen at 12 billion rupees for
next financial year.
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- REVIEW OF 2008/09:

* Economy seen growing at 7.1 pct

* Fiscal deficit seen at 6 pct of GDP against previously
targeted 2.5 pct

* Revenue deficit seen at 4.4 pct of GDP against previously
targeted 1 pct

* April-November 2008 foreign direct investment up an
annual 45 percent at $23.3 billion

* Total expenditure seen higher at 9.010 trillion from
earlier estimate of 7.509 trillion

* Plan expenditure seen higher at 2.830 trillion from
earlier estimate of 2.434 trillion

* Non-tax revenue seen higher at 962.03 billion rupees from
previous estimate of 957.85 billion rupees

* Tax collections seen lower at 6.279 tillion rupees from
previous estimate of 6.877 trillion rupees. Shortfall on fiscal
measures taken to counter impact of the global slowdown on the
Indian economy

* Revenue deficit seen higher at 4.4 percent of GDP, from
earlier target of 1 percent of GDP

* Fiscal deficit seen rising to 6 percent of GDP, from
earlier target 2.5 percent of GDP

* Outlook for foodgrain production encouraging despite high
base of 230 million tonnes produced in 2007/08, on normal
rainfall

* Weathered the crisis of inflation, but no room for
complacency

* Foreign direct investment into India rose an annual 45
percent to $23.3 billion between April and November 2008

* Total debt waiver and debt relief so far amounting to 653
billion rupees, covering 360 million farmers

* National Investment Fund corpus at 18.15 billion rupees
as of Dec. 31, 2008

* Non-performing assets of public sector banks down to 2.3
percent as on March 31, 2008
(For comprehensive coverage of the interim budget please
click-here)
($1=48.8 rupees)
(Compiled by Krittivas Mukherjee, Rajesh Kumar Singh and C.J.
Kuncheria)