NEW DELHI – Aiming to revive economy with pandemic coronavirus, India on Monday unveiled a budget that included proposals to double its healthcare cost to more than 2.2 trillion rupees ($ 30 billion) and a cap increase on foreign direct investment in the insurance sector.
“Our fight against COVID-19 continues into 2021,” said Finance Minister Nirmala Sitharaman. It built on six key pillars of the country’s budget for the financial year beginning in April – health and wellbeing; physical and financial capital, and infrastructure; inclusive development; regenerating human capital; innovation and research and development; and the smallest government and the largest government.
India has so far reported that more than 10.7 million people have contracted COVID-19 in the country, the second highest number in the world after the US Approximately 154,000 have died in the -India due to the disease.
Presenting the first post-pandemic and paperless budget in parliament, Sitharaman said a new federal-backed health care scheme will be launched with spending of about 642 billion rupees ($ 8.8 billion) over the next six years. This will be used to build capacity in primary, secondary and tertiary healthcare systems, strengthen existing national centers, and create new ones that detect and treat new and emerging diseases. emerge.
“I have provided 350 billion rupees for the COVID-19 vaccine” for the next fiscal year, she said, and promised more funding if needed. The budget spend for health and wellbeing, she said, was about 2.24 trillion rupees compared to 944.5 billion rupees this financial year.
India’s healthcare spending is just over 1% of gross domestic product as one of the lowest in the world. The country began a COVID inoculation campaign on January 16 after approving two local vaccines for emergency use. Since then it has absorbed more than 3.75 million people.
The vaccination campaign is crucial for overcoming the Indian economy. The government has reduced its forecast by 7.7% in the financial year ending March due to the collapse of the pandemic, but expects strong growth of 11% in the next fiscal year.
Among other things, Sitharaman also proposed to raise the foreign direct investment limit in insurance companies to 74% from 49%.
The government hopes the economic recovery will be supported by “a strong recovery in the services sector and prospects for strong growth in spending and investment,” he said in their annual economic review ahead of budget.
Sitharaman’s budget proposals also aimed to boost the agricultural sector amid ongoing protests by farmers against recent reforms that they say will benefit corporate over them. The government has said the reforms are liberating the region and empowering farmers.
“To give our farmers a fair amount of credit, I have increased the agricultural credit target to 16.5 trillion rupees. [the next fiscal year from 15 trillion rupees now], “she said.” We will focus on ensuring that more credit flows to animal husbandry, dairy and fishing. “
Sitharaman also estimated that fiscal deficit for the next financial year will be around 6.8% of GDP. It expects it to rise to 9.5% this year due to a decline in government revenues and an increase in market lending due to the pandemic. The government had previously projected that it would be 3.5% of GDP for the year to 31 March.
“Total market borrowing for next year would be around 12 trillion rupees,” the finance minister said, adding that budgeted estimates for spending for the year starting in April are 34.83 trillion rupees. including 5.54 trillion rupees as capital expenditure, an increase of 34.5% over budgeted estimates for the current fiscal year.
The government had earmarked spending of 30.42 trillion rupees for this financial year. This was revised to 34.5 trillion rupees, as it increased spending to revive domestic demand under the influence of pandemics and associated locks.
Moody’s Investors Service said the 6.8% deficit target shows that India is trying to strike a balance between supporting growth and reducing its deficit to some extent, but improvements in tax compliance and monetization targets may be difficult to achieve.
“The government has a limited role to play in reducing spending without undermining further growth, and nominal GDP growth will remain crucial for reducing deficits in the future,” he said in a report.