NEW DELHI (AP) — Indian Prime Minister Narendra ModiThe newly formed government has presented an annual budget to Parliament that increases spending to create more jobs and stimulate economic growth, while also aiming to appease the coalition partners it needs to stay in power.
In her budget speech Tuesday, Finance Minister Nirmala Sitharaman said the government is focused on boosting domestic growth through jobs, training and small businesses.
India’s inflation rate is stable and approaching the government’s target of 4%, she said, while the economy grew at a sizzling rate of 8.2% in the last fiscal year.
“India’s economic growth continues to be the shining exception and will continue to be so in the coming years,” said Sitharaman.
More than a decade after taking office as prime minister, Modi is under pressure to create more jobs to help sustain growth.
The proposed budget includes a $24 billion package for job creation over the next five years and increases spending on loans for small and medium-sized businesses. Allocates $18 billion to support agriculture and agricultural technology, such as climate-resilient seed varieties.
It would also increase spending, to $133 billion, on building thirty million homes for the poor, schools, airports, highways and other infrastructure. The budget would cut taxes on big companies and allocate more funds to two states, Andhra Pradesh and Bihar, which are governed by the Modi government’s biggest coalition partners.
The government plans to build new airports, medical colleges and sports and tourist facilities in the eastern Indian state of Bihar, governed by the Janata Dal (United) party.
Sitharaman also announced special financial support for the southern Indian state of Andhra Pradesh, ruled by the Telugu Desam Party.
Modi’s ruling Bharatiya Janata Party relies on these two regional parties to keep its coalition government in power after failing to win a majority on its own in recent national elections.
India’s economy – the world’s fifth-largest – is expected to grow at an annual rate of between 6.5% and 7% in the fiscal year ending March 2025. But experts say the benefits of its rapid growth are shared unequally, as the wealth of already wealthy Indians has increased steadily, without reaching the majority of Indians who work in the country’s large informal sector, where the quality of jobs is weak and precarious.
Billions of dollars in industry subsidies have not led to enough job creation. To mitigate the rise in unemployment, the government said it will provide 12-month paid internship opportunities to 10 million youth in India’s top 500 companies over a period of five years. Sitharaman said the cost of training will be borne by the companies.
According to the Center for Monitoring Indian Economy, youth unemployment was at 9.2% in early July, highlighting the challenge of creating jobs in the world’s most populous country, where millions of people graduate every year.
Inequality has increased in India over the last decade. According to a report by the World Inequality Lab, the wealth concentrated in the richest 1% of India’s population is at its highest level in six decades.
The government is targeting a fiscal deficit of 4.9% of India’s gross domestic product for the 2024-25 financial year, lower than the figure of 5.1% in February’s short-term budget, Sitharaman said.
India is one of the biggest current sources of emissions that lead to global warming, but the government announced plans on Tuesday to install a new 800-megawatt coal-fired thermal power plant. Sitharaman said the government will also support the development of small and modular nuclear reactors to help meet India’s future energy demands.
The budget also allocates $1.37 billion to address flood damage. India, which is one of the countries most vulnerable to climate impacts, has suffered a increase in flooding due to extreme rainfall and melting glaciers in recent years.
The budget requires approval from both houses of Parliament, but is expected to pass as Modi’s coalition government holds a majority.
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Associated Press writer Sibi Arasu contributed to this report.
