New Indian government's first budget geared towards growth
New Delhi (AsiaNews) - Finance Minister Arun Jaitley presented the first budget of the new Indian government, with the stated aim of boosting growth. India's economy is expected to expand at a rate of 7-8 per cent within 3-4 years. The government should be able to hold down the deficit; however, some questions remain about how to cut the debt and renew investors' confidence.
The federal budget embodies a pro-reform plan without the explosive expectations held in equity markets. Credit goes to Finance Minister Jaitley, especially considering the fact that he took over only six weeks ago, not enough time to include all the reforms he had planned.
Jaitley announced an 8 per cent increase in public spending, substantially unchanged taking into account inflation. The government also plans to get US$ 10.5 billion from the sale of assets, four times what the previous government achieved through privatisation.
The finance minister also announced plans to limit costly large-scale subsidies on food and fuel. Subsidies, which cost India US$ 40 billion each year, will be revised and better targeted. But he gave no details.
The government also announced it plans to attract foreign investors by allowing foreign direct investment in the defence and insurance sectors to rise from 26 per cent to 49 per cent. Meanwhile, defence spending will jump by 12 per cent to US$ 38.35 billion.
The modernisation of the armed forces should reduce the gap with China, confirming India's status as the world's largest armament buyer for three years in row.
As the overall budget is aimed at expanding economic activity, it is in a sense a road map for the next five years. With the focus on infrastructure, it should boost economic growth, curb inflation and allow the Reserve Bank of India to lower interest rates, thus stimulating investment and consumption.
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27/02/2016 14:40
01/03/2006
