New Delhi: The Modi government delivered a bold budget on Monday, boosting investment in healthcare and infrastructure and announcing plans to set up a company to manage stressed banks, as it battles its worst economic contraction in decades.
Amid high expectations for the budget for the coming financial year starting in April, finance minister Nirmala Sitharaman announced plans to double healthcare spending to 2.2 trillion rupees ($30 billion). She also announced a new 641bn rupee federal health scheme.
The government allotted 200bn rupees for the recapitalization of state-run banks, as they continue to grapple with the burden of bad debt, as well as plans to establish a “bad bank” to oversee stressed lenders and non-performing assets.
Asia’s third largest economy faces its deepest contraction since 1952 and businesses have pinned their hopes on the budget to propel the economy out of a recession and boost employment.
Leading up to her address on Monday, Ms Sitharaman described it as a “budget like never before”.
Investors reacted positively to the government’s announcements with the benchmark BSE Sensex gaining more than 4 per cent following the presentation of the budget.
The government also eased the cap on FDI in the insurance industry, included measures to help farmers, such as a boost to its rural infrastructure fund, as well as plans for a national monetization pipeline for brownfield infrastructure assets.
There was a strong emphasis on spending on roads and railways as part of its infrastructure push.