NEW DELHI: India’s annual budget made a fresh bet on the country’s manufacturing sector as Finance Minister Nirmala Sitharaman laid out priorities for Asia’s third-biggest economy and pledged to accelerate growth amid a volatile global environment.
The budget for the next fiscal year will focus on structural reforms particularly in the manufacturing sector, building a robust financial sector and stepping up investments in cutting-edge technologies, including artificial intelligence, she said on Sunday (Feb 1).
The Modi government has been struggling to raise manufacturing from the current level of under 20 per cent of gross domestic product (GDP) to 25 per cent to generate jobs for the millions entering the nation’s workforce each year.
The Indian economy is seen growing at 7.4 per cent in the current financial year, with inflation expected at near 2 per cent. The government’s fiscal deficit for the year is expected at 4.4 per cent of GDP.
To spur private investment and demand, New Delhi has rolled out a series of reforms in recent months, including consumption and income tax cuts, an overhaul of labour laws and steps to open up the tightly controlled nuclear-power sector.
The budget will prioritise scaling up manufacturing across seven sectors, Sitharaman said. They include pharmaceuticals, semiconductors, rare earth magnets, chemicals, capital goods, textiles and sports goods.
The government will also revive 200 legacy industrial clusters.
The government will bring down its debt-to-GDP ratio to 55.6 per cent from 56.1 per cent in the current year. Starting this year, the government has adopted debt-to-GDP as the target for fiscal policy.
To meet this debt target, the fiscal deficit is seen at 4.3 per cent in the new financial year, at par with the current year.
The government will borrow a gross amount of 17.2 trillion rupees (US$187.6 billion) from the bond markets in the new year.
India’s benchmark equity index, the Nifty 50, was last down about 1 per cent with stocks down across market segments including banks, infrastructure, defence and capital markets.
Indian bond and forex markets were closed on Sunday.
https://www.channelnewsasia.com/asia/india-budget-manufacturing-finance-ai-gdp-5899036
