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| India announces rise in spending to help spur growth | India announces rise in spending to help spur growth |
| (about 1 hour later) | |
| India's finance minister has announced an unexpected rise in public spending for the next financial year in an attempt to revive its sluggish economy. | India's finance minister has announced an unexpected rise in public spending for the next financial year in an attempt to revive its sluggish economy. |
| However, he vowed to cut the country's deficit as he unveiled new taxes on the super rich as well as large businesses. | However, he vowed to cut the country's deficit as he unveiled new taxes on the super rich as well as large businesses. |
| P Chidambaram said that increased foreign investment was key to reviving growth in India's economy. | P Chidambaram said that increased foreign investment was key to reviving growth in India's economy. |
| The budget comes at a time when India's growth rate has slowed, hurt by both global and domestic factors. | The budget comes at a time when India's growth rate has slowed, hurt by both global and domestic factors. |
| Asia's third-largest economy is projected to grow by 5% in the current financial year, far below the 7.6% growth projected in last year's budget. | Asia's third-largest economy is projected to grow by 5% in the current financial year, far below the 7.6% growth projected in last year's budget. |
| In his budget speech, Mr Chidambaram said that while restoring India's potential growth remained a challenge, "there is no room for gloom and pessimism". | In his budget speech, Mr Chidambaram said that while restoring India's potential growth remained a challenge, "there is no room for gloom and pessimism". |
| He argued that China and Indonesia were the only Asian nations that were growing faster than India, and that achieving a high growth rate was "not beyond India's capacity". | He argued that China and Indonesia were the only Asian nations that were growing faster than India, and that achieving a high growth rate was "not beyond India's capacity". |
| "We have done it and we will do it again," he said. | "We have done it and we will do it again," he said. |
| 'Numbers look doable' | |
| One of the key concerns among many analysts has been India's ballooning fiscal and current account deficits. | |
| The growing deficits, fuelled by the government subsidies on essential items such as food and fuel, have triggered warnings of a downgrade of the country's credit rating. | |
| As a result, many analysts had expected the government to announce a cut in expenditure in the current budget. | |
| However, the finance minister announced a 16% rise in public spending, saying he had "retrieved some economic space" thanks to recent austerity measures, including a cut in subsidies. | |
| Mr Chidambaram added that while the worsening deficits were a "major worry", the government would try to bring them under control by raising its revenues further. | |
| "Fiscal consolidation cannot be effective only by cutting expenditure," he said. | |
| He pledged to cut India's public deficit to 4.6% of the GDP in the next financial year beginning 1 April, from 5.2% in the current financial year. | |
| Among the new revenue sources, Mr Chidambaram announced an additional surcharge on firms with an income of more than 100m Indian rupees ($1.8m; £1.2m). | |
| Meanwhile, individuals with taxable income of more than 10m rupees will also pay an additional tax of 10%. | |
| Analysts said that despite the rise in spending, the government was likely to achieve its deficit target. | |
| "This is a big picture budget making the best out of a bad situation," aid Sujan Hajra, chief economist at Anand Rathi, Mumbai-based securities firm. | |
| "The direct priorities seem to be reining in the fiscal deficit and avoiding populist measures. The fiscal deficit numbers look doable." |