India, like many other countries, is increasing spending in order to dig itself out of the economic hole it stumbled into. It’s hoped that the government’s plans will provide the necessary muscle to lift the economy and related exchange traded funds (ETFs).
India’s Finance Minister Pranab Mukherjee believes the economy is on track for a 9% growth rate in 2009, writes P. Vijian for Bernama. The government will be promoting inclusive growth and reforms will be aimed toward the rural sector.
Mukherjee discussed plans for the poor, including rural employment and overhauling fertilizer subsidies to favor farmers, which would cost $8.1 billion for the fiscal year, report Vikas Bajaj and Heather Timmons for The New York Times. He also plans on reducing the population in severe poverty by half within five years. In 2005, an estimated 27.5% were reported to suffer from poverty.
Infrastructure spending will be increased to 9% of GDP by 2014. A range of tax reductions will be implemented for the elderly and women, for goods and services bought by exporters, as well as for construction companies and technology firms. In total, government spending will reach 36% and the deficit for 2009/10 will be at a calculated 6.8% of GDP. Ratings firms warned of a credit rating reduction to junk status if the deficit rises too much.