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New Indian Budget Targets Growth, More Inclusive Development

India's Finance Minister Pranab Mukherjee arrives at the parliament to present the federal budget in New Delhi, February 28, 2011
India's Finance Minister Pranab Mukherjee arrives at the parliament to present the federal budget in New Delhi, February 28, 2011

India's top finance official is vowing to overcome the challenges of food inflation and a perception the government is unable to bring corruption under control. In the national budget he submitted to lawmakers, he promised more social spending and infrastructure investment.

Indian Finance Minister Pranab Mukherjee told lawmakers Monday, the world is getting the wrong idea about the country's leadership.

"Certain events in the past few months may have created an impression of drift in governance and a gap in public accountability. Such an impression is misplaced," Mukherjee said.

India's ruling Congress party has been the target of withering criticism by the opposition, which blames Prime Minister Manmohan Singh for failing to keep corruption under control. Mr. Singh last week initiated a joint probe into the highest-profile corruption allegations, in which the 2G mobile phone spectrum was sold at below market prices, costing Indian taxpayers tens of billions of dollars.

Mukherjee says corruption is something that needed to be tackled collectively. He says the budget he prepared for the coming fiscal year is devoted to three main priorities.

"Sustaining high growth trajectory, making development more inclusive, and improving our institutions, public delivery and governance practices," he added.

India is still expected to continue importing more than it exports next year, and the country's deficit could widen if oil prices continue to rise amid political uncertainty in the Middle East. Still, Mukherjee predicted a robust economic performance.

"The Indian economy is expected to grow at nine percent... in 2011-12,” said Mukherjee. “I expect the average inflation to be lower next year and the current account deficit to be smaller and better managed."

Mukherjee says the proposed new budget includes a $25 million microfinance allotment aimed specifically at helping poor women. More broadly, it contains a 17 percent increase in social spending to help hundreds of millions of Indians who live in extreme poverty.

"There is much still needs to be done, especially in rural India,” Mukherjee said. “We have to reconcile legitimate environmental concerns with necessary development needs. Above all, there is the challenge of the growing aspiration of young India."

Mukherjee said a long-awaited food security bill would be submitted to parliament this year. The measure would guarantee access to basic food grains for the lowest income Indians at a fixed price.