India has pledged billions of dollars to help improve the lives of farmers and boost the rural economy, as part of a “budget for the poor” unveiled on Monday.
Arun Jaitley, the country’s finance minister, proposed spending nearly $13bn on rural development, promising higher incomes for farmers who form the majority of India’s 1.2 billion people.
The benefits for farmers could have been prompted by legislative assembly elections that are due in five states in the next few months.
Presenting the annual budget for 2016-17, Jaitley forecast that India’s economy would grow by 7.6 percent in the year ending March 2016. The Indian government intends to distribute the benefits of growth among the poorer sections of society, including the vast majority of India’s farmers, he said.
“We plan to double farmers’ income in five years,” Jaitley said.
“We have a shared responsibility to spend prudently and wisely for the people, especially for the poor and downtrodden.”
Jaitley outlined what he called the government’s “nine pillars” of a “transformative agenda” for the economy.
They include measures to boost education, increase spending on roads, irrigation and other infrastructure, intensify oversight of government spending and reform India’s complicated tax regime.
The Indian economy is doing well despite slowing growth in other emerging and leading economies, Jaitley said. His reference to a recent observation by the International Monetary Fund that India was a bright spot in the global outlook was vigorously applauded by fellow members of the ruling Bharatiya Janata Party.
“We inherited an economy of slow growth, high inflation and low faith in government … amid global headwinds, the Indian economy has held its own,” he said.
Prime Minister Narendra Modi led his Bharatiya Janata Party to a decisive win in national elections in May 2014, promising to overhaul the Indian economy and change archaic laws.
However, Modi’s attempts to streamline taxes and overhaul antiquated labour and land acquisition laws to attract more investment have mostly been thwarted by opposition parties.
Investments in agriculture are urgently needed, since vast numbers of farmers in India’s monsoon-dependent farm sector are suffering from two consecutive years of poor rains, analysts say.
The focus on helping farmers is probably made with an eye towards legislative assembly elections due in five states over the next few months.
In the past two years, the Modi government has pumped funds into infrastructure development. The recent loss of the ruling party in state elections in the farming state of Bihar inspired a change in emphasis.