India's new federal budget is unlikely to drag Asia's third- biggest e...
NEW DELHI - India’s new federal budget is unlikely to drag Asia’s third- biggest economy out of its worst slowdown in more than a decade as the government has proposed only moderate spending increases and small cuts in personal taxes, economists said on Sunday.
In its budget for the year starting in April unveiled on Saturday, the government relaxed its fiscal deficit target so it could spend an nearly $15 billion more, mainly on infrastructure and farming, while pushing ahead with privatizations. “We see the budget as largely neutral for growth and inflation,” said Nomura economist Sonal Varma, adding that the financial sector’s problems could further delay any recovery.
Nomura said annual growth in gross domestic product most likely slipped to 4.3% in the last three months of 2019, after dropping to 4.5% the previous quarter, its slowest in more than six years. “The tax cuts won’t translate into much benefit for taxpayers,” said Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP, a tax consultancy, adding that they could discourage saving and help push market interest rates higher.Indian shares slid to their lowest in more than three month in a special trading session on Saturday after the budget was released, dented by what analysts said was a lack of sufficient stimulus measures.
FILE PHOTO: India's Finance Minister Nirmala Sitharaman holds budget papers as she leaves her office to present the federal budget in the parliament in New Delhi, India, Feb. 1, 2020. REUTERS/Anushree Fadnavis/File Photo
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