Modi's government pledges fiscal prudence in India's post-election budget

India's government on Tuesday promised spending on job creation but also called for fiscal prudence as it announced its financial budget — the first since nationwide elections finished in June which led to a new coalition government being formed.

India's finance ministry on Tuesday lowered the country's fiscal deficit target to 4.9% for the financial year ending March 2025, a revision from 5.1% during the pre-election interim budget published back in February.

That target will then fall to 4.5% or lower for the financial year ending March 2026, India's Finance Minister Nirmala Sitharaman said during the announcements.

Capital expenditure will remain at February's target at 11.11 trillion Indian rupees ($133.9 billion) — or 3.4% of GDP in fiscal year 2025 — backing India's ambitions to enhance its physical and digital infrastructure to become a developed nation by 2047.

Vipul Bhowar, senior director of listed investments of Mumbai-based Waterfield Advisors, said the announcements suggested the government "is steadfast in its commitment to upholding fiscal discipline to enhance the country's creditworthiness and ensure economic stability."

"This is imperative for attracting foreign investment and sustaining growth," he said, adding that "unprecedented financial support" from the central bank will make the fiscal deficit target possible.

Sitharaman on Tuesday also spoke extensively on further developing urban India — especially in Bihar and Andhra Pradesh — two states where key coalition allies of Prime Minister Narendra Modi's Bharatiya Janata Party have strong support.

While the government will push for more financial support to boost infrastructure and speed up agriculture projects in Andhra Pradesh, Bihar could get new