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Narendra Modi's government has promised to increase spending on railways, airports and other infrastructure to record levels and touted its economic achievements as it presented its final interim budget ahead of general elections this year.
Finance Minister Nirmala Sitharaman said in her budget speech that New Delhi will spend 11.11 trillion rupees ($134 billion) in the coming fiscal, an increase of about 11 percent, which she said will have “a large multiplier effect on growth and investment.” would”. .
“The government's efforts since 2014 have ensured a better quality of life and a life of dignity for all citizens,” Sitharaman said, pointing out that per capita income has more than doubled during Modi's 10-year term in office, as India's economy grew by the tenth largest in the world on promotion it is the fifth.
Sitharaman called India a “bright star” whose economic growth is estimated at 7 percent this year. “This is the first budget in Amrit Kaal” she said, a Sanskrit phrase meaning “time of nectar” that Modi has used to describe what he says is a time of unprecedented opportunity for the world's most populous country.
Modi's Hindu nationalist Bharatiya Janata Party is widely expected to win a third five-year term in a lower house vote expected in April and May.
An alliance of opposition parties, including the former ruling Indian National Congress, is in trouble due to internal disputes over possible seat distribution and other issues.
The Congress and other opposition parties will seek to attack the BJP over its economic record, including its failure to create enough jobs for new workers despite India being one of the world's fastest-growing major economies.
Modi remains popular among India's poor, thanks in part to direct social transfers, including a program that provides free grains with food to more than 800 million people, a pandemic-era program to was extended for five years.
The interim 2024-25 budget, which did not contain any major new handouts, is expected to be replaced by a full budget after the new government takes office.
“The good thing is that they haven’t announced any big populist plans,” said Shumita Deveshwar, chief India economist at GlobalData TSLombard. “They feel the economy is doing quite well and are focused on capital spending, which will hopefully have a positive impact on the overall economy.”
Sitharaman said New Delhi will further consolidate its finances and reduce fiscal deficit to 5.1 percent of GDP in the coming fiscal from 5.8 percent in the current year. She said it would fall further to less than 4.5 percent of GDP by 2025-2026.
The budget also did not include any changes to tax rates. “It is a fairly neutral budget that tries to do the best given the constraints of electoral and fiscal prudence,” said Madan Sabnavis, chief economist at Bank of Baroda. “The higher allocation for capital expenditure was managed by curbing other expenditure.”
The Modi government's Ministry of Economic Affairs released an upbeat report on India's economy this week, calling the prime minister's term a “decade of transformative growth.” Modi has vowed to make India a developed economy by 2047, when the country marks 100 years since its independence from the United Kingdom.
“They seem pretty confident about coming back for a third term,” Deveshwar said.
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