SINGAPORE — India's finance minister, Nirmala Sitharaman, presented the country's budget Monday for the fiscal year that begins April 1 and ends March 31, 2022.
In her speech to Parliament, she proposed more than doubling India's health-care and wellbeing spending to 2.2 trillion rupees ($30.1 billion). That includes a new federal scheme with an outlay of 641 billion rupees over six years to develop the country's capacity for primary, secondary and tertiary care as well as to strengthen national institutions and create new ones to detect and cure new diseases, Sitharaman said.
India's health-care spending as a percentage of its GDP is comparatively much lower than many other countries.
The budget comes at a time when India's growth prospects remain uncertain. South Asia's largest economy sank into a technical recession last year due to a lengthy lockdown to slow the spread of the coronavirus outbreak. India's statistics ministry said last month that advanced data indicated the economy still shrank 7.7% for the current fiscal year.
"I want to confidently state that our government is fully prepared to support and facilitate the economy's reset," Sitharaman told Parliament. "This budget provides every opportunity for our economy to race and capture the pace that it needs for a sustainable growth."
The budget will allocate 350 billion rupees for Covid-19 vaccines and the government is committed to providing further funds if required, according to the finance minister.
India last month rolled out a mass immunization program that aims to inoculate 300 million people in its first stage, most of them frontline workers and those above 50 or in high-risk groups. The country has the second-highest number of Covid-19 cases in the world, with more than 10.7 million reported infections. But data suggests the number of new reported cases is falling.
Apart from health care, Monday's budget also focused on infrastructure spending, as well as plans to set up a financial institution to fund those expenditures, asset monetization, bank recapitalization among others.
"Infrastructure needs long-term debt financing," Sitharaman said. "A professionally managed development financial institution is necessary to act as a provider, enabler and catalyst for infrastructure financing."
She added that she will introduce a bill to set up the institution with 200 billion rupees to capitalize it.
Sitharaman said the government's fiscal deficit for the current fiscal year that's due to end on March 31 is pegged at 9.5% of GDP, which far exceeded the targets set in recent years before the pandemic.
To ensure the economy receives the boost it needs, the finance minister said for the next fiscal year, the deficit target would be around 6.8% of GDP — that includes an estimated 5.54 trillion rupees (about $80 billion) in capital expenditure, up 34.5% from a year ago.
The budget's focus on health-care and infrastructure spending was in line with what many economists were expecting.
"Timely implementation of the plethora of well-targeted budget announcements, will hold the key for sustaining the nascent growth revival that is currently underway, and helping the Indian economy attain a higher growth trajectory over the medium term," said Aditi Nayar, principal economist at credit ratings agency ICRA, the Indian affiliate of Moody's.
Some of the measures announced Monday include: