- Special Pages
Finance Minister P Chidambaram (centre) with ministers of State for Finance Namo Narain Meena (left) and S S Palanimanickam, as he arrives at parliament to present the Union Budget in New Delhi, yesterday.
NEW DELHI: India unveiled higher-than-expected spending for fiscal 2013-14 yesterday, aiming to fund it with higher revenues — including new taxes on the rich and large companies — in a budget aimed at reviving growth amid the country’s worst slowdown in a decade.
The budget caps an intensive campaign by Finance Minister P Chidambaram since he was appointed last August to turn around the fortunes of Asia’s third-largest economy after years of policy drift and global economic turmoil.
Total budget expenditure will rise by an unexpectedly high 16 percent in the fiscal year that begins on April 1 to 16.65 trillion rupees ($309bn), even as the fiscal deficit for the current year will fall to 5.2 percent of gross domestic product, besting a revised target of 5.3 percent.
Next year’s deficit will be 4.8 percent of GDP, he said, in line with expectations.
An added surcharge on local firms with incomes of over 100 million rupees and a 10 percent surcharge on individuals with taxable incomes of more than 10 million rupees — a group that now includes just 42,800 people — will be put in place for one year, moves that sent prices of Indian stocks falling.
The budget hiked defence spending by 21 percent to $42.7bn and promised that strains on the public finances would not hamper moves to modernise the million-plus military. The government, one of the world’s largest arms buyers, will raise defence spending to 2.3 trillion rupees ($42.7bn) for the financial year to March 31, 2014, Finance Minister said.
The figure is up a fifth from 2012-13 when the defence budget stood at 1.9 trillion rupees. “I assure the house that constraints will not come in the way of providing any additional requirement for the security of the nation,” Chidambaram told parliament.
The minister earmarked $16bn as “capital expenditure” in line with India’s ambitious moves to acquire the latest hardware.
India is on the brink of buying 126 French Rafale fighter jets for $12bn and is shopping for some 400 combat helicopters worth tens of millions of dollars, as well as artillery, drones and electronic warfare systems.
India and Russia in 2010 agreed to jointly build 250 advanced stealth fighter jets worth $25bn.
New Delhi is also locally building a nuclear-powered submarine as well as a range of nuclear-tipped ballistic missiles which can strike deep inside China.
The two Asian giants fought a brief but a bitter border war in 1962 and despite several rounds of talks the two sides have failed to resolve their territorial disputes.