AVN 68.67 Increased By ▲ 0.92 (1.36%)
BAFL 31.05 Increased By ▲ 0.07 (0.23%)
BOP 4.86 Increased By ▲ 0.05 (1.04%)
CNERGY 3.80 Increased By ▲ 0.04 (1.06%)
DFML 14.09 Increased By ▲ 0.11 (0.79%)
DGKC 42.45 Increased By ▲ 1.45 (3.54%)
EPCL 47.35 Increased By ▲ 0.30 (0.64%)
FCCL 11.83 Increased By ▲ 0.18 (1.55%)
FFL 5.17 Increased By ▲ 0.01 (0.19%)
FLYNG 6.17 Increased By ▲ 0.23 (3.87%)
GGL 11.33 Increased By ▲ 0.04 (0.35%)
HUBC 67.70 Decreased By ▼ -0.25 (-0.37%)
HUMNL 5.72 Increased By ▲ 0.02 (0.35%)
KAPCO 28.05 Increased By ▲ 0.01 (0.04%)
KEL 2.28 Increased By ▲ 0.01 (0.44%)
LOTCHEM 27.11 Increased By ▲ 0.91 (3.47%)
MLCF 22.22 Increased By ▲ 0.56 (2.59%)
NETSOL 87.48 Increased By ▲ 1.03 (1.19%)
OGDC 101.45 Increased By ▲ 0.96 (0.96%)
PAEL 11.35 Increased By ▲ 0.20 (1.79%)
PIBTL 4.22 Decreased By ▼ -0.02 (-0.47%)
PPL 81.60 Increased By ▲ 1.00 (1.24%)
PRL 13.37 Increased By ▲ 0.14 (1.06%)
SILK 0.92 Increased By ▲ 0.01 (1.1%)
SNGP 43.97 Increased By ▲ 0.07 (0.16%)
TELE 6.14 Increased By ▲ 0.07 (1.15%)
TPLP 15.99 Increased By ▲ 0.14 (0.88%)
TRG 122.50 Increased By ▲ 0.92 (0.76%)
UNITY 14.26 Increased By ▲ 0.26 (1.86%)
WTL 1.37 Increased By ▲ 0.05 (3.79%)
BR100 4,220 Increased By 39.5 (0.94%)
BR30 15,406 Increased By 136.3 (0.89%)
KSE100 42,080 Increased By 357 (0.86%)
KSE30 15,891 Increased By 144.8 (0.92%)

India spends big to revive pandemic-hit economy

  • The government plans to borrow an additional US$1.1 billion to fund the deficit, she added.
Published February 1, 2021
Follow us

NEW DELHI: India unveiled a massive spending plan focused on healthcare and infrastructure on Monday, as the government sought to boost a coronavirus-ravaged economy on course for its biggest annual contraction on record.

The nation of 1.3 billion was badly hit by one of the world's strictest virus lockdowns, with growth slumping by a historic 23.9 percent in April-June, and the economy expected to contract 7.7 percent in 2020-21.

"This budget provides every opportunity for our economy to raise and capture the pace that it needs for a sustainable growth," Finance Minister Nirmala Sitharaman told parliament in her annual budget speech.

Prime Minister Narendra Modi added: "We have presented a proactive budget... that will speed up progress in terms of wealth and wellness."

The planned expenditure of US$30.6 billion on health and well-being schemes was more than double the equivalent outlay in the previous budget, although it included US$4.8 billion for the country's ambitious Covid-19 immunisation drive, with plans to vaccinate 300 million by July.

The health sector has long suffered from chronic underinvestment. As of 2017, the country had 0.8 doctors per 1,000 people, around the same level as Iraq, according to the World Bank.

Infrastructure was another big-ticket item in the budget, with US$76 billion -- 34.5 percent more than in the previous budget -- to be sunk into major projects, including roads and railways.

Divestments -- including of national carrier Air India and part of the government's stake in the country's largest insurer, Life Insurance Corporation -- would help raise US$24 billion, Sitharaman said.

But the sales of both state-run firms have been on the cards, with the mooted IPO of the insurer sparking a walk-out by nearly 100,000 staff last year.

With lenders struggling with a mountain of bad debt, Sitharaman said $2.74 billion would be put aside for the next financial year to recapitalise state banks.

Social security benefits, including minimum wages, would be extended to workers in the gig economy, which has flourished amid cheap mobile data and abundant labour.

The spending measures will blow out the fiscal deficit to 9.5 percent of GDP for the financial year ending March, Sitharaman said, from a forecast 3.5 percent.

The government plans to borrow an additional US$1.1 billion to fund the deficit, she added.

As fears of higher income taxes proved unfounded, markets soared with Mumbai's Sensex index up 4.87 percent Monday afternoon.

In its annual economic survey, the government said there would be a "V-shaped" recovery after the severe contraction, forecasting growth to hit 11 percent in 2021-22.

With Asia's third-largest economy in the throes of a slowdown even before the pandemic, analysts said the budget provided much-needed stimulus.

"On the whole it is a pretty positive signal and a pro-investment budget," Sujan Hajra, chief economist at Anand Rathi Securities, told AFP.

"Given the relatively low outlay by the government last year, India... had the space to provide more stimulus."

But some also warned that millions of poorer workers left jobless during the virus shutdown needed more support.

"The budget does not adequately address concerns over inequitable growth," HDFC Bank chief economist Abheek Barua said in a note.

"There has... not been any cushion provided for households -- especially in the informal sector that has been hit the most by the pandemic."


Comments are closed.

India spends big to revive pandemic-hit economy

IMF talks: ‘Some understanding’ reached: MoS Pasha

Qatar agrees to buy OGDCL, PPL shares

PM forms body to activate STZA

Primary deficit: Rs500bn waiver sought from IMF

First six months: Fiscal deficit swells to 2pc of GDP

Petrol shortage hits major cities of Punjab

New landfill sites: Govt decides to alter ICT master plan

Joint sitting of parliament: Rabbani deplores non-inclusion of terror issue in agenda

Real estate owned by overseas Pakistanis: UAE authorities do not share info

PM gets seven more special assistants