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. 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.
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