And with opinion polls suggesting that the ruling Bharatiya Janata Party (BJP) could lose its parliamentary majority, the government delivered a budget to shore up support in the countryside, where two-thirds of Indians live, and among the urban, salary-earning middle class.
The interim budget for 2019/2020 offered direct cash support of 6,000 rupees to 120 million poor farmers and allocated more funds for a rural jobs guarantee scheme and rural development, like building roads and homes. Vying with an opposition that has also trumpeted budget-straining populist measures to support from poorer voters, the government said it would launch a pension scheme for workers in the unorganised sector, which employs some 420 million people.
The budget proposals also reduced the burden for the lower middle class, by exempting people earning up to 500,000 rupees from income tax from an earlier cap of 250,000 rupees. Still, the measures announced on Friday were aimed at putting money into pockets quickly.
"This is not just an interim budget, this is a vehicle for the developmental transformation of the nation," Acting Finance Minister Piyush Goyal told the lower house of parliament, as BJP lawmakers thumped their desks and chanted "Modi, Modi". "India is solidly back on track and marching towards growth and prosperity," said Goyal, who delivered the budget in place of Finance Minister Arun Jaitley, who was in the United States for medical treatment.
India was expected to expand 7.2 percent this fiscal year, Goyal said, keeping its slot as one of the world's fastest growing major economies. But a report in the Business Standard daily the previous day belied the government bullishness over the economy. It said that the government has been withholding an official survey that showed India's unemployment rate at its highest in decades.
Garima Kapoor, an economist at Elara Capital investment bank in Mumbai, said the budget favoured farmers, older voters, workers in the unorganised sector, small and medium sized businesses and middle class families. "The budget is clearly farm-focused, with the elections in mind," Kapoor said. The interim budget for 2019/20 allocated 600 billion rupees for a rural jobs programme and 190 billion for building of roads in the countryside.