India's Finance Minister Unveils Tax Cuts and Infrastructure Spending in Budget

New Delhi, India – India's Finance Minister Nirmala Sitharaman has announced a series of tax cuts and increased infrastructure spending in the country's budget, aimed at stimulating economic growth amidst global uncertainties.

Income Tax Relief

Individuals earning up to 1.2 million rupees ($13,854) annually will now be exempt from paying income tax, a significant increase from the previous 700,000-rupee threshold. This move is expected to benefit approximately 63 million taxpayers, or over 80% of the total.

Budget Deficit

Sitharaman has also announced a smaller budget deficit for the upcoming fiscal year, targeting 4.4% of gross domestic product (GDP), slightly below previous estimates. Increased transfers from the central bank and government-owned institutions will help offset the revenue loss from tax cuts.

Infrastructure Spending

The government plans to allocate 11.2 trillion rupees to infrastructure spending in the next fiscal year, representing a 10% increase. This investment is aimed at boosting economic activity and creating jobs.

Other Highlights

* New policy for labor-intensive sectors like leather and footwear
* Scheme to establish India as a global hub for toy manufacturing
* Reliance on atomic energy to meet future power needs
* Social security cover for gig workers
* Reduced duties on various imported goods, including critical minerals
* 100 billion rupee fund of funds for startups
* Increased loan limit on farm credit cards

Economic Impact

Economists have mixed reactions to the budget, with some praising the tax cuts as a stimulus for consumption. However, concerns have been raised about the ambitious revenue targets and the adequacy of infrastructure spending. The NSE Nifty 50 Index traded slightly lower following the budget announcement.

Fiscal Discipline

Sitharaman emphasized the government's commitment to fiscal discipline, projecting a debt-to-GDP ratio of 50% by March 2031. This prudence is expected to provide leeway for the central bank to lower interest rates in the near future.