India's government has allocated billions of dollars in its budget to focus on job creation and development in regions governed by key coalition partners. The budget, designed to strengthen the coalition and regain voter support after Prime Minister Narendra Modi's recent election setback, includes various tax changes and significant investments in key sectors.
The budget unveiled tax adjustments such as a higher levy on equity investments to address concerns of market overheating, along with reduced taxes for foreign companies to attract more investment. The total outlay of $576 billion includes allocations of $32 billion for rural programs, $24 billion for job creation over five years, and over $5 billion for states governed by coalition partners.
Finance Minister Nirmala Sitharaman emphasized the budget's focus on employment, skilling, small businesses, and the middle class. The government plans to implement reforms in areas such as land and labor to drive economic growth and development.
Despite the increased spending, India has managed to reduce its fiscal deficit target to 4.9% of GDP by 2025, down from 5.1% projected earlier. The government also slightly lowered gross market borrowing to 14.01 trillion rupees.
The budget includes measures to boost employment, such as incentives for companies to train staff and provide cheaper loans for higher education. The government aims to sustain economic growth, with a projected growth rate of 6.5% to 7% for the current fiscal year.
While the budget has been praised for balancing growth-supporting policies with fiscal discipline, economists note that implementing more ambitious reforms may pose challenges for the coalition. Previous attempts at land and labor reforms have faced resistance from states concerned about potential protests.
The budget also maintains focus on long-term infrastructure projects, allocating significant funds for state-level expenditures linked to reform milestones. Tax changes, including adjustments to equity investment rates and corporate taxes for foreign companies, aim to stabilize the market and attract long-term investors.
Overall, India's budget reflects a strategic approach to address economic challenges, promote growth, and create opportunities for sustainable development in key sectors.
