New Delhi, India (BBN)-The Indian government is set to unveil its budget on Monday as it faces pressure to boost growth while also appealing to the country’s poor.
Having overtaken China as the world’s fastest-growing economy, India is seen as a bright spot in the global economy, reports BBC.
But it has been hit by slowing global demand and severe droughts affecting rural areas.
Finance Minister Arun Jaitley also faces pressure to implement promised reforms.
Prime Minister Narendra Modi’s government is expected to increase spending on the rural economy, health and social sectors.
Critics though are concerned this could mean a turn from market reforms and fiscal discipline, which are at the heart of the business community’s wish-list for the budget.
The government needs to “strike a balance between fiscal stimulus and reforms,” Mehda Samant of Fidelity Investments told the BBC.
“We’re expecting a clear roadmap for policy reform and economic intent.”
Since coming to power in 2014, Modi had promised to improve business and investor climate in the country with tax reforms and major infrastructure projects.
That policy has been criticised by the opposition as being too business-friendly and coming at the expense of social spending and welfare projects.
The country’s huge rural population has been hit by severe droughts and recent regional elections have shown dwindling support for Modi.
With crucial elections in largely agricultural states like West Bengal and Uttar Pradesh coming up this year and next, the government is under pressure to address the rural economy.
An increased in social spending without abandoning stimulus and infrastructure projects could mean thought that India would be forced to loosen its fiscal deficit target of 3.5 per cent.