In pre-election budget, India seeks to boost infrastructure spending, curb deficit
India’s government will increase infrastructure spending by 11 percent in the coming financial year and curb its fiscal deficit, the finance minister said in her last budget speech before elections.
Finance Minister Nirmala Sitharaman hailed the economy’s prospects and Prime Minister Narendra Modi’s government in boosting incomes in her speech to lawmakers in New Delhi on Thursday. She pledged to increase housing in the next five years, expand free electricity and improve medical care, especially for women.
The government is benefiting from surging tax revenue, allowing it to continue spending while still reining in the budget deficit. The shortfall for the current fiscal year ending in March is projected to be 5.8 percent of gross domestic product, slightly lower than the 5.9 percent targeted earlier. The government will curb the deficit to 5.1 percent in the next financial year.
The budget — an interim one before a new administration takes office — will allocate $134 billion (11.1 trillion rupees) on capital spending, an increase of 11.1 percent from the previous year. The government had ramped up capital expenditure by almost a third annually in the past three years.
“The next five years will be years of unprecedented development and golden moments to realize the dream of a developed India by 2047,” she said. She vowed support for sectors targeted by Modi in the elections, namely farmers, young people, women, and the poor.
Modi is in a strong position to extend his decade in office in elections likely to take place in April and May. He’s ramped up spending on infrastructure over the years, while giving financial support to key voting blocs, like farmers and women.
The government is predicting 7.3 percent economic growth in the current fiscal year, and the Finance Ministry this week predicted expansion of about 7 percent in the coming year, keeping India on track to remain one of the fastest-growing major economies in the world.
