India’s Hindu nationalist-led government is to pour extra money into support for farmers and a rural jobs program, yesterday delivering its last budget before general elections due by May with the clear aim of winning over votes.
Indian Prime Minister Narendra Modi’s ruling alliance is facing discontent over depressed farm incomes and doubts over whether his policies are creating enough jobs.
The interim budget for 2019-2020 allocated 600 billion rupees (US$8.4 billion) for the rural jobs program and 190 billion rupees to build roads in the countryside, where two-thirds of Indians live.
Photo: Bloomberg
The fiscal deficit in 2018-2019 would be 3.4 percent of GDP, slightly higher than the targeted 3.3 percent, Acting Indian Minister of Finance Piyush Goyal told the lower house of parliament.
Goyal was standing in for Indian Minister of Finance Arun Jaitley, who was undergoing medical treatment in the US.
The deficit was widely expected to be greater than targeted due to a combination of revenue shortfalls and increased spending ahead of the election.
The benchmark 10-year bond yield fell 3 basis points to 7.46 percent once the new fiscal deficit estimate was revealed, as investors showed relief that it was not worse.
“India is solidly back on track and marching towards growth and prosperity,” Goyal said as Modi and lawmakers from the ruling Bharatiya Janata Party thumped their desks in appreciation.
A report in the Business Standard daily on Thursday belied the government’s bullishness over the economy.
The central government has been withholding an official survey that showed India’s unemployment rate at its highest in decades, the newspaper said.
The budget, which is interim and is likely to be followed by a full one in July, is expected to project economic growth of about 7.5 percent for the next fiscal year, while expanding capital spending on railways, roads and ports by 7 to 8 percent, and estimating an increase in revenue of about 15 percent, officials said.
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