India boosts defence, agriculture spending

NEW DELHI: India’s finance minister targeted a return to 9.0 per cent economic growth ‘at the earliest’ in a budget speech on Monday that suggested the country had

seen off the

worst of the

global financial

crisis.

But in announcing increased funding for farmers and poverty alleviation programs, Pranab Mukherjee also warned that India’s soaring fiscal deficit would continue to grow in 2009-10 to 6.8 per cent of GDP.

The estimate was far higher than the 5.5 per cent put forward by the government in an interim, pre-election budget in February.

The initial stock market reaction however was extremely negative, with the benchmark 30-share Sensex falling 659.55 points or 4.42 per cent to 14,253.3 in intra-day trading.

The deficit had ballooned to 6.2 per cent in the year to March 2009 – more than double the government’s target of 2.5 per cent and the highest in nearly two decades.

‘The first challenge is to lead the economy back to the high growth rate of 9.0 per cent per annum at the earliest,’ Mukherjee told parliament as he presented the 2009-10 budget.

‘The second challenge is to deepen and broaden the agenda for inclusive development,’ he said