NEW DELHI — India’s government on Tuesday unveiled its annual budget, which proposed a significant spending increase for highways, road and airports, but a smaller increase for rural development and employment.
The $530 billion budget for the fiscal year beginning on April 1 put forth by Prime Minister Narendra Modi’s government calls for a major investment in infrastructure, but critics said it would do too little to address urgent problems facing the country. Among the big ones: rising unemployment, declines in household income and personal spending, and mounting discontent over economic inequality that the pandemic has made more glaring.
The coronavirus has hobbled India’s economy, robbing it of momentum needed to provide jobs for its young and fast-growing work force. It has also worsened longer-term problems that were already dragging down growth, such as high debt, a lack of competitiveness with other countries and policy missteps.
“You have to grow much faster on a sustained basis. That’s what we don’t have,” said Priyanka Kishore, the head of India and Southeast Asia for Oxford Economics, a research firm.
People across the board have seen an erosion of their real incomes, said Sunil Kumar Sinha, the principal economist at India Ratings, a credit ratings agency. “The income growth is not even matching up to the rate of inflation in the economy,” he said.
As a result, many middle-class Indians have put off buying washing machines, large-screen televisions and kitchen appliances, goods they once splurged on during the festival season. Demand is also cooling off in poorer, rural areas, experts say.
The government had estimated that India’s economy would grow 11 percent for the year that ends next month. It has now reduced that estimate, to 9.2 percent. The estimate for the coming year is 8 to 8.5 percent.
Credit…R S Iyer/Associated Press
Those numbers come on the back of a deep contraction of 7.3 percent in the year that ended in March 2021, when Mr. Modi imposed a nationwide lockdown to curb the spread of the coronavirus. Hundreds of thousands of people lost their jobs and went back to their villages, trying to eke out a living from meager farm plots.
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