Indias government pledged to boost spending on health, education and rural infrastructure to alleviate poverty in its 2006-07 budget on Tuesday but still aims for fiscal prudence, reports the World Bank press review.
Finance Minister P. Chidambaram told Parliament that Asias third-largest economy was likely to grow 8.1 percent in the financial year ending on March 31 but that the government was determined to raise that to ten percent in the next few years.
– The assault on poverty and unemployment continues. I believe that growth is the best antidote to poverty, Chidambaram noted.
He said the government focused on fiscal prudence (tilbageholdenhed) in the current financial year. He set a federal fiscal deficit target of 3,8 percent of gross domestic product for the next fiscal year, falling from a lower-than-expected 4,1 percent expected this fiscal year.
Political allies have put pressure on the government to deliver on pledges to improve the lives of the almost 300 million Indians who live on less than one US dollar (6,20 DKR) a day.
Chidambaram said the government has done so despite a series of natural disasters including floods and the devastating earthquake that hit the Himalayan state of Kashmir, controlled by India and Pakistan, in October. The business community has been upbeat ahead of the budget with the countrys main stock market index, the Sensex, up to a record high Monday.
The minister announced a series of infrastructure projects aimed at producing the power supply, roads, ports, railway stations and airports needed to sustain the rapid growth of the Indian economy. He allocated 187 billion rupees (4,1 billion US dollar) for rural infrastructure projects and said contracts to build five huge power projects would be awarded by December.
India will build 1.300 kilometers of “access-controlled” highways linking key cities, including Mumbai and Baroda, Bangalore and Madras, and Delhi and Agra. In addition, the government expects 220 billion rupees to be spent on oil refining over the next few years, and will encourage spending on refineries, pipelines and green fuel.
Chidambaram asked banks to treat the food processing industry as a priority sector as lack of investment has hampered the growth of many Indian industries. Food processing could be a key driver of growth and employment in Indias rural areas as more than half of Indias population are employed there.
However, they produce just 20 percent of the huge countrys GDP, and lack the resources to develop their farmland. Farm sector output is expected to grow by 2,3 percent in the year to March 2006, way behind the growth levels seen in the industry and service sectors.
Kilde: www.worldbank.org
