India goes big on infrastructure

India’s 2023-24 federal budget, presented by Finance Minister Nirmala Sitharaman on Wednesday, has placed a strong emphasis on infrastructure development and job creation. The government plans to spend $122 billion on the construction of schools, airports, and ports, and aims to ramp up the “virtuous cycle of investment and job creation.”

While boosting infrastructure, the budget also focuses on welfare schemes, tax cuts for the middle class, and renewable energy. The government allocated $4.3 billion towards energy transition initiatives, with a goal of reaching net-zero emissions by 2070, and $8 billion for projects including mangrove restoration and waste-to-biogas conversion.

The tax cuts for India’s middle class, with incomes up to $8,560, and new tax relief measures are expected to drive consumption. Despite the tax cuts, the government aims for a budget deficit of 5.9% of GDP for the next fiscal year.

India’s defense expenditure saw a 13% rise to $73 billion, with a focus on naval fleet construction and air force procurements. The country’s defense spending is still lower than China’s $230 billion allocation for 2022, but tensions on their disputed Himalayan border have led to an increase in India’s spending.

The budget also extended a $24 billion scheme to provide free grains to vulnerable households and increased spending by 66% on affordable housing for the urban poor. Prime Minister Narendra Modi praised the budget as a strong foundation for the development of India.