The United Progressive Alliance, the ruling coalition of the Government of India has announced the annual budget.

The budget, which outlines government spending priorities from 2008 to 2009, has sparked a heated debate in India. Analysts have raised concerns over the increase in the overall government spending, particularly for high provisions of social expenditure and the debt relief programme for small farmers, which accounts for US$ 15 billion, or 1.3 percent of GDP.

Meanwhile, others claim that the increased spending in the social sector is simply a populist strategy to attract voters in the next national elections in May 2009. Furthermore, the government's cornerstone policy of containing the fiscal deficit is contingent on expanded revenues resulting from a projected growth of 8.8 percent for the fiscal year. However, unstable financial markets and high commodity prices could possibly undermine these projections and pose challenges to the government's fiscal position.