The Modi government promises to allocate funds for job creation but will exercise fiscal caution in the post-election budget.
- The finance ministry of India reduced the fiscal deficit target for the financial year ending March 2025 from 5.1% to 4.9%, as announced on Tuesday.
- India's Finance Minister Nirmala Sitharaman stated that the target for the fall of that target will be 4.5% or lower for the financial year ending March 2026.
The Indian government pledged to allocate funds for job creation while emphasizing fiscal responsibility in its budget announcement on Tuesday, following the formation of the new coalition government after nationwide elections in June.
The finance ministry of India reduced the fiscal deficit target for the financial year ending March 2025 from 5.1% to 4.9%, as announced on Tuesday.
India's Finance Minister Nirmala Sitharaman stated that the target for the fall of that target will be 4.5% or lower for the financial year ending March 2026.
India's capital expenditure will remain at its February target of 11.11 trillion Indian rupees ($133.9 billion) or 3.4% of GDP in fiscal year 2025, supporting the country's goal of becoming a developed nation by 2047 through the enhancement of its physical and digital infrastructure.
Narendra Modi's key coalition allies in Bihar and Andhra Pradesh have strong support in urban India, and Sitharaman spoke extensively on developing these cities further.
In Andhra Pradesh, the government will prioritize financial support for infrastructure and agriculture projects, while Bihar may receive funding for new airports, medical colleges, and sports facilities.
To tackle the persistent issue of high unemployment, Modi's government has proposed spending 2 trillion rupees ($23.9 billion) on creating jobs and improving the quality of education and training in the country.
During the June general election, the Bharatiya Janata Party fell short of an outright majority in the lower house of Parliament due to unemployment being perceived as one of the major reasons.
The government plans to reduce the corporate tax rate on foreign companies to 35% from 40%, and also abolish the angel tax for startups, as outlined in the budget.
The budget negatively impacted India's and the indexes, causing them to end the trading day down 0.12% and 0.09% respectively.
In contrast, the Indian rupee strengthened by 0.06% to reach 83.70 against the U.S. dollar.
Asia Economy
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