NEW DELHI, July 6 (AFP): India's new government, led by right-winger Narendra Modi, Thursday unveils its maiden budget -- its first big policy statement on how it intends to overhaul an economy saddled with slow growth and weak public finances.
Although Modi's government will likely fail to shrink a yawning fiscal deficit and faces rising inflation, the mood of investors and voters remains buoyant as they look for detail on his long-term vision.
Modi, who swept to power with the strongest mandate in 30 years in May, "is a free-enterprise person and this (budget) is his moment to show what he intends," D.H. Pai Panandiker, head of economic think-tank the RPG Foundation, told the news agency.
"Change can't be overnight but Modi aims to be here for the long distance," Panandiker said.
Rather than "big bangs" from Thursday's budget, economists expect a credible outline of steps to steer India from a subsidy-laden, bureaucratic culture to a more business-friendly investment climate.
Growth has crashed from near double-digits a few years ago to 4.7 per cent in 2013, marking the second straight year of sub-five per cent expansion, hit by high interest rates, falling investment and wage-eroding inflation.
Modi, who as leader of Gujarat for the past 13 years steered the western state to 10 per cent annual growth, won power in New Delhi on his "Modinomics" mantra of "minimum government, maximum governance" and a pledge of "good days ahead".
Since taking power, he has attempted to play down hefty expectations even as investors drive the share markets to almost weekly record highs.
The 63-year-old has already warned that "bitter medicine" is needed to put the economy on track and prescribed the first dose last month, hiking fares on the ramshackle state railway to help pay for the loss-making network's modernisation.
Finance Minister Arun Jaitley, a close Modi confidant who will present the budget, is also sounding hawkish, calling for "fiscal discipline" and speaking out against "mindless populism" burdening public finances.
But reducing subsidies is a tough challenge in a country where two-thirds of the 1.25 billion population lives on under $2 a day, according to World Bank figures.
That fact was underscored when Modi had to partially roll back the rail fare increase in the face of a public outcry.
© 2024 - All Rights with The Financial Express
