Budget 2020: Govt to spend Rs 2.83 lakh cr on agriculture sector to lift wobbly economy; fiscal deficit to widen to 3.8% this fiscal

Agriculture accounts for 15 percent of India’s gross domestic and a source of livelihood for more than half of the country’s 1.3 billion population.

Reuters February 01, 2020 14:30:05 IST
Budget 2020: Govt to spend Rs 2.83 lakh cr on agriculture sector to lift wobbly economy; fiscal deficit to widen to 3.8% this fiscal
  • For fiscal 2020/21 Sitharaman set the fiscal deficit at 3.5% as it boosts state funding to shore up a sagging economy

  • The government estimates economic growth this year, which ends on 31 March, will slip to 5%, the weakest pace since the global financial crisis of 2008-09

  • She also said the government will spend $50.65 billion on a federal water scheme to address the challenges facing one of the world’s most water stressed nations

New Delhi: India’s government said on Saturday it would inject nearly $40 billion into the sprawling farm sector and billions more into a federal water scheme to get broader economic growth back up from its lowest in a decade.

Finance Minister Nirmala Sitharaman, presenting the 2020/21 Budget for the financial year beginning 1 April to Parliament, said the fiscal deficit for the current year would widen to 3.8 percent of gross domestic product, up from 3.3 percent targeted for the current year.

For fiscal 2020/21 Sitharaman set the fiscal deficit at 3.5 percent as it boosts state funding to shore up a sagging economy that has put pressure on Prime Minister Narendra Modi, who is already facing a public backlash over a new citizenship law seen as socially divisive.`

Budget 2020 Govt to spend Rs 283 lakh cr on agriculture sector to lift wobbly economy fiscal deficit to widen to 38 this fiscal

Representational image. Reuters.

To help generate revenue, she also announced the government will reduce stakes in the country’s largest insurer Life Insurance Corporation as part of its divestment programme.

India is grappling with its worst economic slowdown in a decade. The government estimates economic growth this year, which ends on 31 March, will slip to 5 percent, the weakest pace since the global financial crisis of 2008-09.

Sitharaman said Rs 2.83 lakh crore ($39.82 billion) will be allocated for agriculture and allied activities including helping farmers set up solar power generation units as well as establish a national cold storage to transport perishables.

“Farm markets need to be liberalized, farming need to be made more competitive” she said.

She also said the government will spend $50.65 billion on a federal water scheme to address the challenges facing one of the world’s most water stressed nations.

Agriculture accounts for 15 percent of India’s gross domestic and a source of livelihood for more than half of the country’s 1.3 billion population.

Sitharaman said “water stress-related issues are now a serious concern across the country,” and that the government is proposing comprehensive measures for 100 such water-stressed districts.

In its annual economic report, released on Friday, the government predicted that growth would rebound to 6 percent to 6.5 percent in the fiscal year beginning 1 April, but warned that it may have to exceed its deficit target to revive growth.

“People have reposed faith in our economic policy,” said Sitharaman to the thumping of desks in parliament. “This is a Budget to boost their income and enhance their purchasing power.”

Sitharaman also set aside Rs 69,000 crore for the health sector, up marginally from last year’s allocation as the government seeks to implement an ambitious scheme to provide health insurance for millions of people.

Some economists said global trade tensions and the outbreak of coronavirus in China, which has killed more than 250 people so far, pose a new risk to economic recovery by hitting cross-border commerce and supply chains.

“The economic recovery is likely to be slow and shallow despite the recent measures to boost investments,” said Anagha Deodhar, an economist at ICICI Securities.

The shares got off to a choppy start in a special trading session on Saturday ahead of the budget.

In early trade shares slipped in reaction to an overnight shakeout in global markets on growing concerns about the economic impact of the coronavirus outbreak in China.

Follow full coverage of Union Budget 2020-21 here

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