India’s Budget

The Economist writes:

Responding to the domestic pressures, Mr Chidambaram produced a budget whose central theme was curbing price rises. It also gave a much-needed boost to spending on agriculture, education and health care. The stockmarket’s first reaction was gloomy, made worse by plummeting markets around the world, and businessmen found little to cheer about. But, while defending the pursuit of growth, Mr Chidambaram was aiming at different targetsfor economic and social as well as political reasons. He increased funds for education by 34%, while money for health and family welfare went up by 22%. By comparison, spending on defence will go up just 7.8%.

Enjoying the surge in revenues brought by rapid growth, Mr Chidambaram said that agriculture must hold the first charge on our resources. He announced plans to boost credit to farmers, as well, disappointingly, as to increase fertiliser and water subsidies, which tend to benefit the better-off, and help cripple the budget in leaner times. The Confederation of Indian Industry, a business lobby group, said more should have been done to increase private-sector investment. But Mr Chidambaram said later that agriculture had to be tackled through the millions of small farmers with less than a hectare of land rather than corporate investment. The hope is that such measures to boost agricultural supply will curb prices.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.