Finance Minister Nirmala Sitharaman said private investment is on the rise after the pandemic and the government should focus on boosting growth.
Prime Minister Narendra Modi’s government has presented parliament with a $550 billion annual budget that calls for a 33 percent increase in capital spending to boost economic growth and create jobs ahead of next year’s general election.
Finance Minister Nirmala Sitharaman said on Wednesday that private investment is picking up after the coronavirus pandemic and the government should focus on boosting growth.
India’s economy is projected to grow 7 percent in the fiscal year ending in March. The government forecasts growth of 6-6.5 percent next year, but is struggling to create enough jobs for its population of 1.4 billion people.
“The budget again creates the need to accelerate the cycle of investment and job creation,” Sitharaman said.
India’s economy surpassed that of the United Kingdom last year to become the fifth largest in the world. Its population is expected to surpass China’s this year.
Despite steady economic growth, Modi’s government has struggled to shrug off unemployment concerns and is under pressure to create enough jobs, especially as it faces key state elections this year and a general election in 2024 that it is still widely expected to win.
According to the Center for Monitoring the Indian Economy, the unemployment rate was 8.3 percent in December, up from 6.5 percent in January 2022.
The government is targeting a budget deficit of 5.9 percent of India’s gross domestic product (GDP) for the financial year 2023-24, down from 6.4 percent for this fiscal year.
Despite concerns that the world economy is headed for a downturn, the finance minister said she is confident that the country’s future is bright. “India is on the right track.”
Free cereal, affordable housing
In addition to increasing capital spending to build schools, airports, helipads and other infrastructure to $122 billion, the budget extended a $24 billion scheme to provide free grains to vulnerable households for one year.
The government will also increase by 66 percent its spending on providing affordable housing to the urban poor, Sitharaman said, and prioritize “green growth” with a $4.3 billion investment to help India meet its goal of becoming carbon neutral by 2070 .
The budget also announced new tax relief measures aimed at bringing respite to India’s large middle class. But he cut spending by 30 percent on India’s rural employment program, a boon for the country’s most vulnerable, drawing criticism from activists and the opposition.
On Wednesday, Modi praised the budget as laying a strong “foundation for the aspirations and decisions of a developed India” and said the government’s investment in infrastructure had increased by more than 400 percent since 2014, when he first became prime minister.
Opposition MPs chanted “Adani, Adani” at one point, forcing Sitharaman to pause. Political opponents have called on India’s market regulators to investigate India’s richest man, Gautam Adani, after a US-based short seller published a report last week accusing him and his company of stock market manipulation and accounting fraud.
The resulting sell-off in shares linked to Adani wiped tens of billions of dollars off the market value of his business empire.
Critics of the 60-year-old billionaire say his rise has been fueled by his seemingly close ties to Modi.
The budget requires the approval of both houses of parliament, but must be passed because Modi’s party has a strong majority.