Factbox: India’s big spending budget aims to sustain recovery
India’s Finance Minister Nirmala Sitharaman on Tuesday unveiled a federal budget, which laid out plans to ramp up government spending to boost growth despite concerns over a burgeoning fiscal deficit.
The government of Prime Minister Narendra Modi, in power since 2014, has seen the economy lose momentum half-way through its tenure, before the coronavirus pandemic drove it into deep recession. Asia’s third-largest economy bounced back last year and the budget aims to sustain that momentum, though a run-up in consumer prices poses a major challenge.
Here are some graphics showing government estimates of some key economic indicators, and how the Indian economy has fared under Modi over the past seven years.
Growth is in the current fiscal year ending to March 2022 is estimated at 9.2% for, coming off the low base and slowing to 8 to 8.5% in the coming fiscal year, which would still be the fastest among the world’s major economies.
The fiscal deficit for the current year is expected at 6.9% of gross domestic product, slightly more than the 6.8% targeted earlier, Sitharaman said. For the next fiscal year, the government is targeting a deficit of 6.4% of GDP.
New Delhi has pegged the divestment target for next financial year at 650 billion rupees ($8.70 billion) while also lowering the target for the current fiscal year to 780 billion rupees fuelling expectations that the size of this year’s initial public offering of state-run giant insurer Life Insurance Corp could be smaller than earlier expected.
RISING RETAIL INFLATION
Indian households are grappling with rising costs of living at a time when jobs and incomes have taken a hit from the pandemic.
The economic slowdown has pushed India’s unemployment rate above the global figure in five of the last six years.
A decline in labour participation rate as disheartened job seekers look to move overseas instead, also poses an economic and policy challenge.