According to sources economists said the government's new budget is unlikely to drag the country out of its worst slowdown in more than a decade as it has proposed only moderate spending increases and small cuts in personal taxes. Meanwhile they said there was a risk the government might miss its fiscal deficit target for 2020-21 as it was dependent on raising over Rs 2 lakh crore from the sale of stakes in state-run firms and financial institutions to meet ambitious revenue goals.
Furthermore in its budget for the year starting in april unveiled on saturday, the government relaxed its fiscal deficit target so it could spend an nearly Rs 10 lakh crore more, mainly on infrastructure and farming, while pushing ahead with privatizations. Perhaps economists and industry leaders said the budget proposals would provide some support to growth over the longer term but were insufficient to give it an immediate boost.
Moreover India's economy is forecast to grow 5 per cent in the year ending in march, its weakest pace in 11 years, ratcheting up the pressure on prime minister narendra modi, who is already facing backlash over the controversial Citizenship Amendment Act. Nomura economist Sonal varma said "We see the budget as largely neutral for growth and inflation," adding that the financial sector's problems could further delay any recovery. The government has proposed increasing spending to boost consumer demand and investment but it could not go far enough because a slowdown in revenue receipts tied its hands.
