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India is set to unveil its latest Budget [Copy link] 中文

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Post time 2012-3-16 13:18:25 |Display all floors

India will unveil its national Budget later on Friday amid fears that its economy is slowing and the government may struggle to meet spending promises.

        The government's biggest headache is how to deal with its expensive subsidy system, which cuts the prices of goods such as food, fertilizer and fuel.

        An attempt earlier in the week to raise railway ticket prices was criticised for being anti-poor.
        The budget is expected at about midday (06:30 GMT) in Delhi.
        Over the past few years, India has increased its spending on projects and subsidies aimed at improving the quality of life for the country's poor.
        Subsidies now account for more than 2% of the country's total gross domestic product.

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Post time 2012-3-16 13:18:51 |Display all floors
However, to fund this, India needs steady and strong economic growth, as well as rising tax revenues.

Over the past few quarters, India's economy has been slowing. In the last three months of 2011, it grew by 6.1%, the weakest pace of expansion in nearly three years.

At the same time, the cost of fuel on international markets has been rising, increasing the cost of subsidies and eating up a larger chunk of the state's resources.

The budget deficit for the current year is expected to be close to 6%, compared with the government's target of 4.6%. This overshoot has prompted the government to say that it will take action to bring the deficit back down to more manageable levels.

Adding to the problems faced by the government is the fact that it is proving increasingly unpopular with voters. It suffered in recent state elections and has been accused of failing to push through much-needed reforms after being embroiled in a number of corruption scandals.

Analysts said the government had a number of ways of increasing revenues while steering clear of the unpopular move of cutting subsidies. They could cut earlier tax breaks, boost local sales taxes and step up plans to sell state enterprises.

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