Bangkok India’s finance minister, Nirmala Sitharaman, is turning her country into a gigantic construction site: according to her, there should be eight million new houses for the needy within a year. In addition, Prime Minister Narendra Modi’s confidante has announced that 25,000 kilometers of motorway will be completed within twelve months. The planned expansion of the Indian expressways is roughly twice the length of the entire German autobahn network.
The ambitious infrastructure projects are part of an extensive spending program with which India wants to assert itself as the fastest growing major economy in the world. Sitharaman presented the details of this on Tuesday in her annual budget speech before Parliament – a traditionally well-regarded appointment at which the finance minister presents the government’s plans for the next fiscal year.
The 62-year-old politician, who has been responsible for India’s finances since 2019, was optimistic despite ongoing corona concerns: “I realize that we are in the middle of the omicron wave,” she said. In view of an advanced vaccination campaign and a better equipped health system, the country is well equipped to withstand the challenges. “I am confident that we will continue on our path of strong growth,” said the minister.
More than eight percent growth expected
For the current fiscal year, which runs until the end of March, Sitharaman expects a growth rate of 9.2 percent. The country with a population of 1.4 billion is thus experiencing the strongest upswing of all G20 countries. “This reflects the high level of resilience in our country,” said the minister.
Top jobs of the day
Find the best jobs now and
be notified by email.
She assumes that the strong growth will continue: According to government forecasts, India’s economy will also grow by more than eight percent in the coming fiscal year – and thus also depend on its large neighbor China, whose gross domestic product will increase by less than five percent in 2022 according to the International Monetary Fund will.
In order to support the upswing, Sitharaman says goodbye to the budgetary discipline that characterized the first years of her term of office and even prevented massive economic stimulus programs in the midst of the corona crisis: the economist, who once gave up her doctorate to move to London with her husband, is now planning with a deficit of 6.4 percent of economic output – significantly more than expected by analysts.
She wants to increase government investment spending particularly strongly. They are expected to increase by 35 percent to more than 100 billion dollars compared to the previous year.
Observers praised the plans: Shamika Ravi, India expert at the US think tank Brookings Institution, commented that now is not the time to press ahead with budget consolidation.
Shilan Shah, India economist at the analyst firm Capital Economics, noted that there is happily little evidence that huge sums of money are being made available for purely prestige projects. “Instead, the money will be distributed without fanfare to many areas, ranging from transport to energy and irrigation.” The measures are suitable for carrying the upswing further over the coming months.
Sitharaman’s presentation of the government’s plans lasted just 92 minutes in parliament. MPs and journalists had prepared for a much longer session – because the minister is actually known for particularly long appearances. Two years ago, she set a new record with her 162-minute household speech. “Your briefest budget speech may now prove to be the most impactful,” commented industrialist Anand Mahindra.
Record IPO and a state digital currency in planning
Sitharaman – India’s first finance minister since Indira Gandhi – did not always experience so much approval in her political career. As spokeswoman for the Hindu nationalist party BJP, before she entered the cabinet, she got into a public dispute with her powerful party colleague Sushma Swaraj, who headed India’s foreign ministry until 2019. “Anyone who has speakers like Sitharaman no longer needs enemies,” Swaraj complained at the time.
However, the conflict did not stand in the way of Sitharaman’s career in government: she headed first the Department of Commerce, then the Department of Defense and was then appointed to succeed her patron Arun Jaitley in the Treasury Department.
There she still faces major challenges: her officials are currently working on the record IPO of the state insurance group LIC, planned for March, which could be valued at more than 200 billion dollars. In addition, Sitharaman announced the launch of a state digital currency for the coming fiscal year.
She presented the plan along with a new 30 percent tax on crypto trading profits. The new levy was unusually welcomed by Indian crypto investors: it takes trading in Bitcoin and Co. out of the legal gray area – and is taken as a signal that a feared ban on crypto currencies may not materialize after all.
More: New billion investment: This is how Google wants to turn hundreds of millions of Indians into Android users