NEW DELHI (AP) – Indian Prime Minister Narendra Modi’s government included hefty spending on roads, airports and other infrastructure in an annual budget presented to Parliament yesterday, looking to spur growth and improve its popularity just ahead of key state elections.
The budget for the coming fiscal year, which starts on April 1, calls for USD533 billion in spending, up from USD477 billion in the current year, Finance Minister Nirmala Sitharaman said in presenting it to lawmakers.
“The economy has shown resilience to come out of the pandemic. We need to sustain the level of growth,” Sitharaman said.
She said the new infrastructure investments were part of the government’s economic blueprint for the next 25 years.
The budget would set the fiscal deficit at 6.4 per cent of gross domestic product. It calls for spending USD2.7 billion on highway expansion and USD6.4 billion on housing for the poor. It includes spending on new roads and airports and an emergency credit line guarantee scheme for small and medium-sized businesses.
India is Asia’s third largest economies and is one of the fastest growing in the world. Growth is forecast at 9.2 per cent for the current fiscal year after a 7.3 per cent contraction the year before, its worst performance in 40 years. The government has projected growth for the coming fiscal year at eight per cent to 8.5 per cent.
Rising vaccination rates helped instil confidence in re-opening businesses after a devastating wave of coronavirus infections swept through the country in the spring of 2021. But while the economy has bounced back, many jobs disappeared, with the unemployment rate rising to eight per cent in December, according to the think tank Center for Monitoring Indian Economy. City dwellers were hit particularly hard.
People are taking to the streets in protest.
Last week tens of thousands of people demonstrated in India’s poorest state of Bihar, contending that the hiring process for 35,000 jobs with the railways, India’s largest employer, was not transparent. More than 10 million people had applied for the jobs. The hiring was eventually suspended after protests turned violent.
Sitharaman also announced investments in organic farming and a special fund to finance startups in agriculture. But the budget offered no large stimulus programme for farmers, many of whom are unhappy with the Modi party.