New Delhi: India plans to increase infrastructure expenditure in its annual budget next week in order to put the economy on a more solid basis, but fiscal limits mean any concessions for pandemic-affected households are unlikely, officials said.
Following a contraction of 7.3 percent in the previous fiscal year, Asia's third largest economy is expected to expand 9.2 percent in the fiscal year that ends in March.
Despite this, private consumption, which accounts for about 55% of GDP, is below pre-pandemic levels due to rising household debt, and retail prices have increased by nearly a tenth since the coronavirus outbreak began in early 2020.
The budget is released just days before elections in five states, including the most populous, Uttar Pradesh, which may prompt Finance Minister Nirmala Sitharaman to promise increased rural expenditure and food and fertiliser subsidies.
However, these are expected to be dwarfed by spending to improve transportation and healthcare networks, which analysts predict will increase by between 12% and 25% in the coming fiscal year. An official on condition of anonymity said, "We would focus on recovering the economy through increased investments while keeping individual and corporate taxes stable,", adding that boosting growth would be a priority.