India’s government will breach its budget deficit target for a second year as Prime Minister Narendra Modi tries to woo voters before an election with more spending.
The fiscal deficit in the year ending March 31 is forecast at 3.4 percent of gross domestic product versus a previous target of 3.3 percent, Finance Minister Piyush Goyal said in his budget speech on Friday in New Delhi. The government will spend 750 billion rupees ($10.6 billion) a year on a farm income support plan, he said. (Follow live updates here)
Goyal was appointed to the post last week to replace Arun Jaitley, who is on medical leave.
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The budget shortfall was better than the 3.5 percent median estimate in a Bloomberg survey of economists, buoying bonds and the currency. The rupee reversed losses to trade at 71.0725 against the dollar at 11:15 am on Friday.
The last budget by Modi’s government before the election boosted allocations to rural infrastructure and employment programs. Modi’s ruling Bharatiya Janata Party is under pressure to turn around its performance in a national election due by May after losing control of three key states in regional polls last month.
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