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India reveals pro-poor budget

February 29, 2016

New Delhi has promised to spend billions to boost infrastructure, help poor farmers and increase rural employment. The budget comes as years of economic growth have done little to improve conditions in rural India.

Image: DW/P. Mani Tewari

Indian Finance Minister Arun Jaitley outlined the "nine pillars" of a "transformative agenda" for India's economy on Monday. These included boosting education, increasing investments in infrastructure and improving the country's tax rules.

Ram Vilas Paswan, the union minister for food and public distribution, tweeted the plan:

Jaitley described India's 120 million farmers as the "backbone of the country's food security," and pledged to spend $5.2 billion (4.8 billion euros) on the agricultural sector. "We need ... to give back to our farmers a sense of income security," he told members of the parliament in New Delhi.

"We plan to double farmers' income in five years," Jaitley said.

The plan foresees introducing crop insurance schemes to boost farmers' incomes, increasing access to markets and funding village councils. "For rural development as a whole I have allocated 877.6 billion rupees (11.8 billion euros/$12.7 billion) in this budget," Jaitley said.

The government would also increase spending for the National Rural Employment Guarantee Scheme, which offers 100 days of employment in public companies to village households.

The government would also work toward ensuring electricity for all villages in the coming years. "The government is committed to achieve 100-percent village electrification by May 1, 2018," Jaitley said.

Indien Finanzminister Arun Jaitley
Jaitley's 'nine pillars' aim to transform IndiaImage: picture-alliance/dpa/R. Gupta

A test for Modi

Despite the increased spending, Jaitley said the government would continue to try to reduce its fiscal deficit to 3.5 percent of its gross domestic product in the next year.

India, the world's fastest growing major economy, is expected to grow at 7.6 percent this fiscal year. But attempts to overhaul manufacturing have not been as successful as intended, and farming remains the major source of employment. Years of drought and falling crop prices led more than 12,000 farmers to commit suicide in 2014 alone.

The pro-farmer budget could also be an indication that Prime Minister Narendra Modi's Bharatiya Janata Party is trying to attract more supporters after its members performed dismally at local elections in Bihar last year.

State elections are scheduled to take place in farming states such as West Bengal and Uttar Pradesh later this year. Modi's victory in the polls could help him get a majority in the upper house of the parliament in New Delhi, making it easier for him to pass stalled economic reforms.

mg/kms (AP, AFP, Reuters)