India unveils 2018/19 budget aiming faster growth

Indian Finance Minister Arun Jaitley leaves his office to table the union budget. Pic/ AFP Photo

India's government began unveiling its 2018/19 federal budget on Thursday aiming for stronger economic growth to win over voters ahead of a national election next year while trying to maintain fiscal restraint.

Farm incomes have fallen and Prime Minister Narendra Modi's administration has failed to deliver enough jobs to employ the mass of Indian youth joining the labour market each year, fueling discontent in the countryside where two-thirds of Indians live.

To the thumping of desks from partymen, Finance Minister Arun Jaitley rose in the lower house of parliament to deliver what is likely to be the last full year budget ahead of an election that must be held by May 2019. Gross domestic product is expected to grow 6.5 percent to 6.75 percent in 2017/18 " its slowest pace in three years " while many other emerging markets are enjoying a synchronised revival.

While growth has been slowed by the botched rollout of a nationwide goods and service tax (GST) in 2017, and a shock move to ban high value currency notes in late 2016, investors have so far looked beyond the setbacks, perceiving the initiatives as positive long term. To keep investors on side however, Jaitley will have to convince them that he plans to keep to his word on working towards reining in the fiscal deficit, one of Asia's largest.

A Reuters poll this week showed most economists expect a 3.2 percent deficit in 2018-19, as the government looks to increase investments in areas such as agriculture. Anything much beyond that, however, may draw a swift sell-off in the markets.

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