India's budget highlights job creation, rural growth

Indian Prime Minister Narendra Modi's newly formed government unveiled an annual budget on Tuesday to the Indian Parliament with a proposal to significantly increase spending for job creation and rural development.

Analysts termed the annual budget an attempt to appease its coalition partners or regional political parties, as it needs to stay in power, adding the plan was not economically justified.

In her budget speech, Finance Minister Nirmala Sitharaman said her government is focused on boosting productivity and resilience in agriculture, promoting employment and skill development, supporting manufacturing and services sectors, advancing urban development, strengthening energy security and investing in infrastructure.   

"India's economic growth continues to be the shining exception and will remain so in the years ahead," Sitharaman said while presenting the budget.

The proposed budget includes a $24 billion package to create jobs over the next five years and increase lending to small and medium-sized businesses. It allocates $18 billion to support agriculture and agricultural technology, such as climate-resilient seeds.

The finance minister also announced to raise spending, to $133 billion, on construction of 30 million homes for the poor, schools, airports, highways and other infrastructure. The budget would cut taxes on big companies and allocate more money to two states, Andhra Pradesh and Bihar, whose regional parties are the biggest coalition partners of the Modi government.

The government also proposed to build new airports, medical colleges and sports and tourism facilities in eastern India's Bihar state, which is ruled by the Janata Dal (United) party.

Shitaraman said India's inflation is stable and moving toward the government's target of 4 percent, while the economy grew by 8.2 percent last fiscal year.

Sitharaman also announced special financial support for southern India's Andhra Pradesh state, ruled by the Telugu Desam party or TDP. Janata Dal (United) party and TDP are two key allies of the federal coalition government.

Modi's ruling Bharatiya Janata Party hopes the two regional parties will continue to support the coalition government after it failed to secure majority on its own in the last national election held in June this year. 

It proposed to spend a record $132.85 billion on infrastructure in the financial year ending March 2025 to support growth and create more jobs in the world's most populous country.

The spending plan was unchanged from the interim budget presented in February before the national elections.

"This would be 3.4 percent of our GDP," Sitharaman said. 

 Experts pointed out that unemployment and inflation are the major reason behind Modi's failure to secure an absolute majority in the national election.

Modi said on Tuesday the Budget 2024 empowers the neo-middle class, the poor, the villages, and the farmers.

"Today's budget will act as a catalyst in making India the world's third-largest economy," he said in a speech, reiterating his pledge to make India one of the top three economies during his third term in office.

India's main opposition party, Indian national Congress leader and former finance minister P Chidambaram took a swipe at the government over the federal budget, saying he is glad that Sitharaman has read the Congress poll manifesto and copied from it after the recent election debacle of the ruling BJP.

"I am happy she has virtually adopted the Employment-linked incentive (ELI) outlined on page 30 of the Congress Manifesto. I wish the financial minister had copied some other ideas in the Congress Manifesto. I shall shortly list the missed opportunities," the former finance minister posted on X, formerly known as Twitter.

Expressing disappointment, noted economist Abhirup Sarkar said this is a very lopsided budget and in any case it is not a good budget and economically justified. The scheme for job creation is not enough to arrest the growing unemployment rate, Sarkar pointed out, adding it is an attempt to please its coalition partners to stay in power.

Government's attempt to boost the manufacturing sector is a perfunctory measure, India should give more emphasis to bring labor intensive investment for job creation. Micro, small and medium scale enterprises should be efficient and should be able to compete in the market to bring down import on Chinese goods, Sarkar underscored.

The government should find out long-term measures to arrest the growing unemployment and it should boost up domestic manufacturing sectors for job creations and to bring down its import from China, suggested Biswajit Dhar, a former professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University.

Federation of India Chambers of Commerce, FICCI, a largest apex business organization in India, congratulated the finance minister for delivering a growth-oriented budget while maintaining fiscal discipline.

"The budget is inclusive, with a strong thrust on quality job creation and skilling. It also strikes a balance between agriculture and manufacturing, with elements of services," said Anish Shah, FICCI president.

Indian Chamber of Commerce, a non-governmental trade association, however, said the budget has taken a proactive stance on the long-term sustainable developmental aspects of the economy, building on its strengths, while simultaneously inkling a growth vision for the future, in sync with the theme of Viskhit Bharat (developed India). The government has tried to provide for all, the ICC said in a press statement.

The writer is a freelance journalist for China Daily.