India increased spending in the last budget ahead of the elections

NEW DELHI, Feb 1 (Reuters) – India’s government on Wednesday unveiled a $550 billion budget for the next fiscal year that starts on April 1, with plans for record capital spending while reining in fiscal deficit.

Prime Minister Narendra Modi’s party, which faces elections in key states this year and a national vote in 2024, is under pressure to create jobs in a country of 1.4 billion people, where many have struggled to find employment and decent wages.

Below are some key figures from the budget presented by Finance Minister Nirmala Sitharaman.

Where will the money come from to finance the expenditure?

The government targets a 12% growth in revenue receipts to Rs 26.32 trillion.

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tax revenue

For the year, the government targets an 11.4% growth in net tax revenue to Rs 23.3 trillion.

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Market Borrowing

Total market credit is estimated at 15.43 trillion rupees ($189 billion), while net credit is seen at 11.81 trillion rupees.

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781 billion rupees of bonds issued to states to compensate for shortfalls in goods and services tax, not net borrowing, reducing repayments due next year.

New Delhi aims to exchange 1 trillion rupees worth of bonds next year after exchanging 1.03 trillion rupees worth of bonds this year.

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Exemption Receipts

The government expects to raise Rs 510 billion through share sales of various state-owned enterprises.

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Spending waves

The government has raised its spending target by 7.5% to Rs 45.03 trillion in 2023/24.

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Capital expenditure

The government will spend R10 trillion on long-term capital expenditure in 2023/24, expanding a strategy to revive growth after the Covid-19 pandemic.

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This allocation is more than Rs 7.5 lakh crore in the current year’s budget. The 33% year-on-year increase follows last year’s 35% rise.

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Major Grants

The government has cut large subsidies by 28% to Rs 3.75 trillion in the next financial year.

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Lack of funds

The government will target a budget deficit of 5.9% of GDP for 2023/24, up from 6.4% this year. A Reuters poll had projected the budget gap at 6% of GDP.

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($1 = 81.8150 INR)

Compiled by Aftab Ahmed; Editing by Kim Coghill

Our Standards: Thomson Reuters Trust Principles.

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