India's finance minister has unveiled a populist budget for the 2003-2004 fiscal year. This year's budget is designed to overcome India's low growth and rising unemployment.
India's Finance Minister Jaswant Singh says the government will lower taxes for salaried workers and poor Indians alike - something analysts say his Bharatiya Janata Party will benefit from when national elections are called next year.
Unveiling the 2003 budget in a two hours speech to Parliament, Mr. Singh also announced he was scrapping a so-called "security surcharge tax," imposed in 1999 when India's army fought infiltrators from Pakistan in the Kargil region of Indian-administered Kashmir.
In the face of frequent interruption by opposition lawmakers, the finance minister stressed his top priority is to balance social welfare issues with economic growth.
"This budget is about addressing the problems of poverty and the lifetime concerns of our citizens," he said. "It is about giving a major boost to infrastructure and laying the foundations for balanced accelerated growth in agriculture and industry - plus tax reform."
Under the budget proposal, middle class Indian families could receive annual tax savings of about $150. Taking a page from President Bush's recent economic proposals, Mr. Singh announced he was abolishing taxes on dividends from the sale of stocks.
While taxes were the main focus of his speech, Mr. Singh gave few details about how the government planned to boost agricultural production. Low farm output is blamed for dragging down the overall growth rate to 4.4 percent last year. He also gave few details on how the government will cut the ballooning fiscal deficit - now more than five percent of the national income (GDP)and rising.
After hearing Mr. Singh's proposals, influential economic columnist TN Nainen said the budget will make some people happy, but he says the finance minister put off hard choices on curbing spending.
"The basic position I think is that there is a lot of good stuff when you look at the micro's, but hugely negative when you look at the macro's. That is because the deficit is so high and there is not much sign of correction next year," he said. "So you are really asking for trouble to hit you at some point. But, I think you will get a lot of happy people on the street, because the overall tax burden for most people will come down."
Mr. Singh also avoided any politically controversial moves to reform India's labor laws, privatize state-run industries or allow large scale foreign investment in key industries - measures called for by leading government economists in India's annual Economic Survey published this week in advance of the budget presentation. Instead, India's finance minister announced cuts in customs duties on a wide range of goods from medical supplies to life insurance policies.