Indian Prime Minister Narendra Modi's coalition government has presented its first full-year budget following his party's loss of an outright majority in parliament last year. Finance minister Nirmala Sitharaman introduced measures to address the slowing growth, increasing prices, and declining consumption among the middle class in Asia's third-largest economy.
Key points from India's union budget include:
- Raising income tax exemption limits to 1.2m rupees ($13,841) for tax-free earnings, benefiting millions of taxpayers. - Adjusting income tax slabs to benefit the middle class, aiming to boost urban consumption. - Increasing market enthusiasm, especially in automobile, consumer goods, and online grocery sectors, in response to the announcements. - Emphasizing state-funded capital expenditure on major infrastructure projects as a growth driver. - Proposing interest-free loans to states for increased infrastructure development. - Setting a target to generate 100GW of nuclear energy by 2047. - Raising Foreign Direct Investment limits in the insurance sector from 74% to 100%. - Establishing a committee to drive regulatory reforms and reduce compliance burdens on corporations. - Supporting small and micro industries with fiscal aid of 1.5 trillion rupees over the next five years. - Enhancing production-linked subsidies and reducing import duties to promote local manufacturing units. - Reiterating a commitment to reducing the government's deficit to 4.4% by 2026. - Addressing the challenge of balancing economic growth with fiscal responsibility amidst a recent slowdown. - Anticipating GDP growth to range between 6.3-6.8% by March 2026, in line with the Reserve Bank of India's projections.
Following the budget announcement, attention shifts to the central bank's upcoming monetary policy meeting. Amidst easing growth and inflation trends, the Reserve Bank of India is expected to lower borrowing costs after maintaining policy rates at 6.5% since February 2023.