India's finance minister, Nirmala Sitharaman, has unveiled a short-term budget to meet government expenditures until national elections are held in May. This budget aims to boost spending on infrastructure projects, provide housing for poor villagers, and reduce the fiscal deficit by curtailing subsidies. Additionally, the government plans to focus on raising skills for young people and supporting small and medium enterprises to create more job opportunities.
The announcement comes as Prime Minister Narendra Modi's government faces criticism for not generating enough employment opportunities, despite offering substantial subsidies to bolster manufacturing. With national elections on the horizon, expectations of populist giveaways to appeal to voters have risen. However, the short-term budget focuses more on managing existing programs and does not introduce major spending initiatives.
If voted back to power, the government plans to construct 20 million affordable houses within the next five years, in addition to the 30 million already built. To expedite infrastructure development, the short-term budget has allocated $145 billion. Sitharaman emphasized that government policies would prioritize the development and empowerment of the poor, farmers, youth, and women.
In a bid to promote sustainable transportation, Sitharaman also unveiled plans to bolster the electric vehicle (EV) ecosystem. This includes supporting EV manufacturing, establishing charging stations, and encouraging the adoption of electric buses for public transportation. However, no specific details regarding the cost or timeline of the project were provided.
Despite global headwinds and geopolitical risks, India anticipates its economy to grow by approximately 7% in the next fiscal year. The International Monetary Fund estimates a growth rate of 6.7% for this financial year ending on March 31. Last year, India surpassed the United Kingdom to become the world's fifth-largest economy, with a GDP of $3.7 trillion. The Modi government aspires to further propel economic growth and aims to become the third-largest economy in the next three years, with a projected GDP of $5 trillion.
Sitharaman also highlighted India's success in attracting foreign direct investment, which amounted to $596 billion over the past nine years. She stated that the government is currently negotiating trade treaties with various countries, with the goal of transforming India into a developed nation by 2047.
As the short-term budget awaits approval from Parliament, a more comprehensive full-year budget will be presented by the new government after assuming power. With Prime Minister Modi leading the race, his Hindu nationalist party is expected to secure a third straight term, thanks to his widespread popularity and a fragmented opposition led by the Congress party.
Overall, the short-term budget strives to address key concerns such as job creation, infrastructure development, and affordable housing, while also laying the groundwork for India's economic growth and sustainability goals.
