India reveals first budget featuring 'Modi-nomics'
By Penelope MacRae, AFP
July 11, 2014, 12:05 am TWN
NEW DELHI--India's new right-wing government under Prime Minister Narendra Modi unveiled its maiden budget Thursday, promising a new era of fiscal prudence and greater opportunities for foreign investors in key sectors of the economy.
Finance Minister Arun Jaitley told parliament that the new right-wing government, in office since May, had inherited a “challenging” situation of low growth and high inflation from the previous Congress administration.
But he laid out what he said were broad indicators of the direction the government intended to travel in: towards lower government debt, more privatization and greater openness to foreign investors.
Government overspending would be brought down dramatically in the next three years, with the fiscal deficit reduced to 3.0 percent in 2016/17 from a target of 4.1 percent this financial year, Jaitley pledged.
“We cannot leave behind a legacy of debt for future generations,” he said.
He said the budget was “the beginning of a journey to sustain seven to eight percent growth in the next three to four years.”
Jaitley also announced an increase in the permitted level of foreign direct investment in the defense and insurance sectors to 49 percent from 26 percent.
He also said the government intended to sell an unspecified amount of shares in the debt-laden public banks which are in need of fresh equity.
“The government will continue to hold majority ownership, but the citizens of India will get direct shareholding in these banks,” he said.