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India Budget Projects Strong Economic Growth - 2004-02-03


India is forecasting higher than expected economic growth in a new interim budget. A resurgent economy is expected to be a major focus during general elections expected to be held in a few months.

Finance Minister Jaswant Singh told Parliament that India's economic growth is expected to be in the region of 7.5-8.0 percent during the fiscal year ending March. That is up from earlier estimates of seven percent.

"The country's macro-economic situation is better than it has ever been in last 50 years," the finance minister said. "Internationally, too, there is now a greater and a much more widespread recognition that India is progressing in all aspects of national endeavor, that it has evolved into a stable economy with assured growth."

The coalition government, led by the Hindu-nationalist Bharatiya Janata Party, plans to dissolve Parliament on Friday and hold general elections months ahead of schedule, probably around April. A resurgent economy is one of the factors that prompted the government to call early elections.

With an eye on the coming polls, the government courted both rural and middle-class voters in its interim budget. Finance Minister Singh said the budget is aimed at cutting poverty and creating jobs. He announced concessions to farmers such as cheaper credit, and programs for urban voters such as new hospitals.

The interim budget avoided major policy changes. It basically allows the government to continue spending until a new government presents a full budget.

In recent weeks, the government has announced a range of tariff cuts and concessions that will benefit the middle class by reducing prices of several products.

Mr. Singh also announced a cut in India's fiscal deficit, saying it would be around 4.8 percent of gross domestic product in the fiscal year that ends in March.

Economists and international financial institutions have expressed concern that the high deficit could threaten growth.

The government is making economic performance a central plank of its poll campaigning. A good monsoon last year has boosted agricultural growth, and both the services and manufacturing sector are buoyant.

In recent weeks the BJP led government has launched a huge advertising campaign dubbed "India Shining," highlighting economic growth. But opposition parties are questioning the claims, saying unemployment is growing, and the economic boom has not cut poverty.