Finance minister Pranab Mukherjee has announced a Rs40,000 crore hike (around 39 per cent) in the gross budgetary support for the annual plan 2009-10 over the Interim Budget for 2009-10. The bulk of the enhanced budgetary support is directed towards public investment in infrastructure, with special emphasis on rural infrastructure, raising growth potential and leading to income generations, the finance minister said in his Budget speech.

Besides this, Mukherjee said state governments would be permitted to borrow additional 0.5 per cent of their GSDP by relaxing the fiscal deficit target under FRBM from 3.5 per cent to 4 per cent of their GSDP. This will enable the state governments to raise additional open market loans of about Rs21,000 crore in the current year.

Thus, total additionality in the plan expenditure by centre and the states together would be Rs61,000 crore over the Interim Budget. "I do believe that this fiscal expansion will go a long way in reversing the impact of slowdown and accelerate over growth revival in the medium term", Mukherjee said.

The Budget has projected the gross fiscal deficit at 6.8 per cent of GDP; revenue deficit has been estimated at around 4.8 per cent in 2009-10.

Government has increased defence outlay to Rs1,41,703 crore and increase the provision for subsidy to Rs1,11,276 crore.

Fiscal deficit as a percentage of GDP is projected at 6.8 per cent as compared to 2.5 per cent of the budget estimates (BE) for 2008-09 and 6.2 per cent as per the provisional accounts of 2008-09.