Modi’s government pledges spending on jobs but fiscal prudence
Nirmala Sitharaman, India’s finance minister, leaves the ministry to present the budget at the parliament in New Delhi, India, on July 23, 2024.
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India’s government promised spending on job creation but also called for fiscal prudence as it announced its financial budget on Tuesday — the first since nationwide elections finished in June where the new coalition government was formed.
India’s finance ministry on Tuesday lowered the country’s fiscal deficit target to 4.9% for the financial year ending March 2025, a revision from 5.1% during the pre-election interim budget published back in February.
That target will then fall to 4.5% or lower for financial year ending March 2026, India’s Finance Minister Nirmala Sitharaman said during the announcements.
Capital expenditure will remain at February’s target at 11.11 trillion Indian rupees ($133.9 billion) — or 3.4% of GDP in fiscal year 2025 — backing India’s ambitions to enhance its physical and digital infrastructure to become a developed nation by 2047.
Sitharaman spoke extensively on further developing urban India — especially in Bihar and Andhra Pradesh — two cities where key coalition allies of Prime Minister Narendra Modi have strong support.
While the government will push for more financial support to boost infrastructure and speed up agriculture projects in Andhra Pradesh, Bihar could get new airports, medical colleges and sports facilities.
With high unemployment remaining a big and sticky challenge for Modi’s new government, It also proposed Tuesday to spend 2 trillion rupees ($23.9 billion) to increase jobs and boost quality of education and training in the country.
Unemployment was seen as one of the biggest reasons that caused Modi’s Bharatiya Janata Party to fall short of an outright majority in the country’s lower house of Parliament during the general election in June.
Elsewhere, the corporate tax rate on foreign companies is also slated to reduce to 35% from 40%, the budget outlined. The government also plans to abolish the angel tax for startups.
India’s Nifty 50 and the BSE Sensex reacted negatively to the budget. Both indexes ended the trading day down 0.12% and 0.09% respectively.
The Indian rupee on the other hand gained 0.06% to stand at 83.70 against the U.S. dollar.
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