India’s Modi sets aside billions for jobs, allies in post-election budget

The budget lays out funds for rural programmes, to create jobs and for two states ruled by coalition members.

India’s government has assigned billions of dollars for job creation and regions run by key coalition partners in a budget aimed at cementing the coalition and winning back voters after Prime Minister Narendra Modi’s election setback.

Tax changes unveiled in the budget on Tuesday included a higher levy on equity investments to allay concerns the market might be overheating and lower taxes for foreign companies to attract more investment.

The $576bn in total outlays included $32bn for rural programmes, $24bn to be spent over five years to create jobs, and more than $5bn for two states ruled by coalition partners.

“In this budget, we particularly focus on employment, skilling, small businesses, and the middle class,” Finance Minister Nirmala Sitharaman said on Tuesday.

The government will also implement reforms across factors of production, including land and labour, she said.

Subsequent budgets would continue to focus on those areas, Sitharaman said while presenting her seventh annual budget.

Despite the new spending, India cut its fiscal deficit target to 4.9 percent of gross domestic product in fiscal year ending on March 31, 2025, from 5.1 percent in February’s interim budget, helped by a large surplus of $25bn from the central bank.

The government also marginally reduced gross market borrowing to 14.01 trillion rupees ($170bn).

Economists had blamed the distress in rural areas and a weak job market for a poor poll showing that cost Modi’s Bharatiya Janata Party (BJP) its absolute majority. They have repeatedly said land and labour reforms are essential for India to sustain strong economic growth.

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