India's newly appointed finance minister, Nirmala Sitharaman, will present a full-year budget on Friday and analysts expect it to focus on consumption, investment and agriculture.
The budget will cover the remainder of the fiscal year that started April 1, 2019 and run until March 31, 2020. Earlier in February, before India headed to the polls,where it poured money to support farmers and bolster rural job creation.
Some high frequency indicators — such as industrial output data and auto sales numbers — have suggested the slowdown could be more severe than previously predicted. Making matters worse,"Expectations are running high for pro-consumption effort and extended emphasis on the welfare framework," Radhika Rao, an economist at Singapore's DBS Group, wrote in a Monday note.
As such, Sitharaman will have to find a way to make resources available to fund various welfare programs without raising the tax burden on the populace — higher taxes tend to dampen consumer demand.cited sources familiar with the matter and said Friday's budget may increase the personal income tax threshold for some individuals.
"Reviving the investment climate is of paramount importance, which has been moderating for the past years," DBS Group's Rao said, explaining that the government's infrastructure spending in recent years had led to a recovery in the investment environment.Farmers were the big winners in the interim budget. The government allocated 600 billion rupees for a rural jobs program and 190 billion rupees for building roads in the countryside, where two-thirds of Indians live.
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