India's Finance Minister Arun Jaitley yesterday unveiled a Budget with measures focused on rural India and the poor.
A health scheme that covers 100 million poor families is among the measures, aimed at disgruntled voters ahead of elections next year, when Prime Minister Narendra Modi will seek re-election.
It is the last full Budget presented by Prime Minister Narendra Modi's government as political parties start gearing up for next year's general election as well as eight crucial state elections this year.
Mr Jaitley, who devoted a substantial portion of his two-hour speech to rural India, said the government will allocate 14.34 trillion rupees (S$295 billion) to agriculture and rural infrastructure, in addition to a slew of schemes for the poor.
More than 68 per cent of Indians live in rural areas.
"(The) focus of the government next year will be on providing maximum livelihood opportunities in the rural areas by spending more on livelihood, agriculture and allied activities and construction of rural infrastructure," he said, adding that India is now a US$2.5 trillion (S$43.3 trillion) economy.
Spending on agriculture, which takes up more than 17 per cent of the gross domestic product (GDP), includes a plan to bulk up infrastructure with 317,000km of rural roads and build 5.1 million new houses. The government also pledged 500,000 rupees (S$10,300) for each eligible person for hospital care as part of a health protection scheme Mr Jaitley said would be the world's biggest.
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BUDGET PLANS
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The government will allocate 14.34 trillion rupees (S$295 billion ) to agriculture and rural infrastructure, in addition to a slew of schemes for the poor. Spending on agriculture, which takes up more than 17 per cent of the GDP, includes a plan to bulk up infrastructure with:
317,000km Rural roads to be built.
5.1m New rural houses.
$10,300 For each eligible person for hospital care.
BOOSTING RURAL INFRASTRUCTURE
(The) focus of the government next year will be on providing maximum livelihood opportunities in the rural areas by spending more on livelihood, agriculture and allied activities and construction of rural infrastructure.
INDIA'S FINANCE MINISTER ARUN JAITLEY, on the Budget unveiled yesterday.
Yet the announcements on public spending saw the government facing criticism for revising the fiscal deficit target to 3.3 per cent of the GDP for 2018-19, up from the earlier estimate of 3 per cent. The rival Congress Party slammed the Budget as "a failure".
The Modi government came to power on the back of promises to create millions of jobs and boost economic growth. But unemployment - which the International Labour Organisation has projected to rise to 18 million this year - remains a serious problem, while farmers have suffered with unseasonal rain and falling incomes. The government's decision to demonetise high value currency notes last year also hit farmers as it led to a cash shortage in a cash economy.
Analysts said the Budget was clearly aimed at placating rural voters while ensuring growth, which Mr Jaitley said was on course to exceed 8 per cent.
Mr Rishi Sahai, managing director of investment bank Cogence Advisors, said: "The Budget aims to address three main areas - agrarian distress, unemployment and infrastructure spending to spur growth.
"This is an election Budget. But a key issue will be implementation of the new schemes like insurance."
While Mr Jaitley cut corporate tax for small firms to 25 per cent from 30 per cent, he announced a 10 per cent long-term capital gains tax on shares. This will apply to profits exceeding 100,000 rupees from shares held for more than a year.
Industry bodies welcomed the Budget, particularly the focus on small businesses, with the Confederation of Indian Industry calling it "balanced and prudent".
But some, like PHD Chamber of Commerce and Industry president Anil Khaitan, believe the government should not have the long-term capital gains tax.
