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| India outlines growth challenge | India outlines growth challenge |
| (30 minutes later) | |
| India's government has unveiled its annual budget, saying the "first challenge" is to return to a growth rate of 9% a year "at the earliest". | India's government has unveiled its annual budget, saying the "first challenge" is to return to a growth rate of 9% a year "at the earliest". |
| Finance Minister Pranab Mukherjee said the growth rate for the present fiscal year was projected at 6.7%. | Finance Minister Pranab Mukherjee said the growth rate for the present fiscal year was projected at 6.7%. |
| He said the second challenge would be to "deepen and broaden the agenda for inclusive development". | He said the second challenge would be to "deepen and broaden the agenda for inclusive development". |
| The government increased spending on urban poor schemes and the landmark jobs-for-work scheme to help the poor. | The government increased spending on urban poor schemes and the landmark jobs-for-work scheme to help the poor. |
| Mr Mukherjee said the states should remove bottlenecks to speed up infrastructure projects, and announced increased funds for construction of highways and flood prevention schemes. | Mr Mukherjee said the states should remove bottlenecks to speed up infrastructure projects, and announced increased funds for construction of highways and flood prevention schemes. |
| "The first challenge is to return the GDP growth rate of 9% at the earliest," Mr Mukherjee said. | "The first challenge is to return the GDP growth rate of 9% at the earliest," Mr Mukherjee said. |
| "The second challenge is to deepen and broaden the agenda for inclusive development." | "The second challenge is to deepen and broaden the agenda for inclusive development." |
| Prime Minister Manmohan Singh said the budget was essentially a rural development budget, and also that it would accelerate growth. | |
| Analysts meanwhile have said it is a populist, spending, budget to kick-start India's economy. | |
| 'Further stimulus' | 'Further stimulus' |
| The finance minister said that there were "signs of revival in domestic industry and foreign investors have also returned to Indian markets in the last couple of months". | The finance minister said that there were "signs of revival in domestic industry and foreign investors have also returned to Indian markets in the last couple of months". |
| "It is possible that the two worst quarters since the global financial meltdown in September 2008 are behind us," Mr Mukherjee said. | "It is possible that the two worst quarters since the global financial meltdown in September 2008 are behind us," Mr Mukherjee said. |
| Mr Mukherjee said the government could not "afford to drop its guard". | Mr Mukherjee said the government could not "afford to drop its guard". |
| "We have to continue our efforts to provide further stimulus to the economy," he said. | "We have to continue our efforts to provide further stimulus to the economy," he said. |
| The Indian economy grew 6.7% in the year to the end of March 2009, but had grown by an average of 8.8% in the previous five years. | The Indian economy grew 6.7% in the year to the end of March 2009, but had grown by an average of 8.8% in the previous five years. |
| Deficit | Deficit |
| The government has pledged "inclusive" growth to boost rural development and social initiatives. | The government has pledged "inclusive" growth to boost rural development and social initiatives. |
| KEY BUDGET TOPICS The biggest risk the government faced was disappointing voters. | KEY BUDGET TOPICS The biggest risk the government faced was disappointing voters. |
| With this self-styled populist budget, it will have done almost all the things it promised to. | With this self-styled populist budget, it will have done almost all the things it promised to. |
| The main focus is on rural development and there are a raft of new economic and social development plans. | The main focus is on rural development and there are a raft of new economic and social development plans. |
| It has also boosted infrastructure funds, tweaked the tax system, and provided food guarantees to some of India's poorest people. | It has also boosted infrastructure funds, tweaked the tax system, and provided food guarantees to some of India's poorest people. |
| But there are still questions over how it will finance it all. The budget deficit will widen to 6.8%, and there is little room to raise taxes. | But there are still questions over how it will finance it all. The budget deficit will widen to 6.8%, and there is little room to raise taxes. |
| Boosting the economy will be key to its success. | Boosting the economy will be key to its success. |
| Ben Richardson, Editor, BBC India Business Report | Ben Richardson, Editor, BBC India Business Report |
| Exports - which make up about 15% of gross domestic product - have also fallen, as overseas demand for goods continues to shrink in the global recession. | Exports - which make up about 15% of gross domestic product - have also fallen, as overseas demand for goods continues to shrink in the global recession. |
| Harish Galipelli, head of research at Karvy Comtrade said: "By pushing banks to lend aggressively to farmers, we can expect an increase in the productivity of agricultural produce. | Harish Galipelli, head of research at Karvy Comtrade said: "By pushing banks to lend aggressively to farmers, we can expect an increase in the productivity of agricultural produce. |
| "With incentives for exporters, export-oriented commodities like cotton and spices may rule firm." | "With incentives for exporters, export-oriented commodities like cotton and spices may rule firm." |
| The government under Prime Minister Manmohan Singh is well placed to embark on economic changes, having won a new term with a strong margin in May. | The government under Prime Minister Manmohan Singh is well placed to embark on economic changes, having won a new term with a strong margin in May. |
| But shares fell as the budget was announced, with the benchmark Sensex down over 5%, as the market worried about how the government would fund its increasing deficit. | |
| India's fiscal deficit expanded to 6.2% in 2008-09 as the government launched stimulus spending to mitigate against world recession. | India's fiscal deficit expanded to 6.2% in 2008-09 as the government launched stimulus spending to mitigate against world recession. |