Vijay Goel, Chairman of the London Chamber of Commerce Asian Business Association, and Chairman of ASSOCHAM UK, One of the largest Chamber of Commerce in India, comments on today’s India budget for Asian Lite News
The third budget of the Narendra Modi government is focussed on rural economy of India. This is a budget of small initiatives to support larger economic frame on grass root level. The government had allocated $12.7bn (£9.15bn) for rural development and additional initiatives to give farmers more freedom to sell their output in an integrated national agricultural market.
A target of 100 percent electrification of villages by May 2018. Arguably, 70 percent of people live in small villages. Recent draughts and with nine state elections coming up in the next fiscal year, this seems to be a populist budget.
In addition, there is support for start-ups – from tax breaks to funds for women entrepreneurs. The combined capital spending on roads and railways will be Rs 2.18 trillion. Push on Income tax revenue to increase seven percentages.
The Budget allows 100 percent foreign direct investment to be allowed in food processing industry and promises further reforms in foreign direct investment policy in insurance, pension, asset recast companies.
The Budget sets gross market borrowing at 6 trillion rupees and fiscal deficit at 3.9 percent of GDP in 2015/16. It further proposes to set up panel to review fiscal responsibility management act. However, limited moves to address the problem of bad loans that have clogged up the banks in past years.