New Delhi, Feb 1 (EFE).- India on Wednesday unveiled its budget for the financial year 2023-2024 (April to March cycle), marked by public spending on infrastructure being increased by 33 percent to $122 billion, tax cuts and the target of keeping the fiscal deficit below 5.9 percent.
Finance Minister Nirmala Sitharaman announced a series of measures to “unleash the potential” of the Indian economy, while presenting the last full budget of the Bharatiya Janata Party government in the lower house of the parliament, ahead of the 2024 general elections.
Following a trend established in recent years – as the government has increased public spending to overcome the slowdown induced by the coronavirus pandemic – Sitharaman announced a boost in infrastructure spending for the third consecutive year.
“The capital investment is being increased steeply for the third year in a row, 33 percent, to 10 trillion rupees, which will be 3.3 percent of GDP,” the minister said.
She added that the public expenditure on infrastructure has a “large multiplier impact on growth and employment” and claimed that the private sector was againt investing in India due to an optimistic outlook, despite a “massive slowdown globally caused by Covid-19 and a war.”
Specifically, the Indian government is set to allocate 2.4 trillion rupees (around $29 billion) to the railways sector, compared to the one trillion-rupee allocation in the last cycle, apart from proposing to build 100 “critical transport infrastructure projects” as part of logistical support for the industrial sector.
Announcing a total expenditure increase of 45 trillion rupees ($550 billion), Sitharaman reiterated the government’s objective of continuing to reduce fiscal deficit and bringing it below 4.5 percent by 2025-26, compared to the pre-pandemic objective of 3.5 percent.
“The fiscal deficit is estimated to be at 5,9 percent of GDP. In my budget speech for 2021-2022 I had announced that we planned to continue the path of fiscal consolidation (…). We have adhered to this path, and I reiterate my intention,” she said.
During the ongoing financial year, the fiscal deficit is expected to be around 6.4 percent of the GDP.
Aiming to control the fiscal deficit on one hand and announcing tax cuts on the other, the finance minister referred to the “hard-working middle class,” in the context of paying taxes.
Those who earn up to 700,000 rupees per year (around $8,500), have now been exempted from paying income tax, with the exemption limit being increased from the existing 500,000 rupees.
The announcement was cheered energetically in the house, although the applause was more muted when Sitharaman announced that the income-tax for the highest-earning bracket has been reduced from 42.7 percent to 39 percent. EFE