India has unveiled plans for structural reform to spur growth, which has been weak for the last two years.
The new government’s first budget included an eight percent rise in spending, which is roughly unchanged after taking inflation into account.
There will also be sales of state assets and changes to VAT.
The bottom line was a pledge to boost the pace of economic growth to seven to eight percent in three to four years from less than five percent now.
But analysts noted there were no specifics on how the country’s fiscal deficit – running at 4.1 percent of gross domestic product – would be reduced.
That ran counter to expectations that Finance Minister Arun Jaitley would be forced to raise the target due to weak revenue and high subsidy costs.
The Confederation of Indian Industry welcomed the budget, but wants to see what the government actually does:
The Confederation’s President Ajay S. Shriram told reporters: “I think the importance of having an actual delivery on it, having an actual implementation on it and ensuring that the results come at the end of the day. Overall, we think it is a very positive direction which the government has set for national growth, for economic growth and for job creation.”
India also plans to set up a high-level committee to review retrospective tax claims against foreign firms.
Those are blamed for choking off investment from abroad after companies – led by Britain’s Vodafone – were hit with massive tax demands.
Vodafone vowed in response to continue its fight against a years-old $2.2 billion (1.6 billion euro) charge.