India’s Finance Minister Pranab Mukherjee, presented his annual budget to Parliament in February; he revealed that India had weathered the global slowdown quite well; in fact, manufacturing output rose 18.5 percent in November 2009, compared to the previous year. The minister predicted the fiscal deficit would fall to 5.5 percent in the 2010-11 fiscal year from 6.9 percent in the current year.
The Congress-led government seeks to maintain high levels of public spending to support strategies aimed at the poor, to boost a flagging rural economy and to modernize the country’s infrastructure. The budget includes a record $43 billion for infrastructure development. To offset the pain of higher prices, Mukherjee reduced the personal income tax for 60% of the nation’s taxpayers, by raising the minimum threshold income for taxation. By April next year, a new direct tax code and the goods and services tax (GST) will be introduced.
The target for raising funds through the disinvestment of stakes in state-owned companies has been set at $5.4 billion, or 25 times the target for the previous year. The government seems ready to take on some unpopular decisions in battling employee unions and other interests that oppose privatization.