NEW DELHI - Facing an economic slowdown, India has unveiled plans to ramp up foreign investment and meet its ambitious target of growing into a $ 5 trillion economy by 2025.
"We need to invest heavily in infrastructure, in digital economy, in job creation," Indian Finance Minister Nirmala Sitharaman said, as she presented the first annual budget six weeks after the Bharatiya Janata Party captured a resounding victory in general elections.
She said that the government will consider liberalizing some sectors, such as insurance, aviation and media, which have been tightly controlled.
The most urgent task confronting Prime Minister Narendra Modi as he starts his second term in office is to restore momentum to an economy that has lagged to its slowest pace in five years. India grew by 5.8 percent in the first three months of the year, falling from its perch as the world's fastest growing major economy.
Ahead of the budget, a government report said India will reverse the slowdown on the back of higher investment, savings and exports, in a way similar to how China propelled its growth.
The government also promised to give tax breaks and other benefits to boost start-ups, which help generate jobs that India needs, as its unemployment rate soars to a 45-year high.
While imposing higher taxes on the super rich, the government also laid out ambitious plans to provide electricity, housing and clean cooking fuel to the millions in the country who still lack access to basic amenities. The Indian finance minister also announced monthly pensions for 30 million small retailers.
"We have set the ball rolling for a new India," Sitharaman said. "Welfare for the poor are all increased, we have not pinched on those areas."
Prime Minister Modi expressed optimism that a slew of such measures will empower the poor over the next five years.
Critics said the government, however, did not lay out a roadmap to liberalize stringent labor and land laws, which have been stumbling blocks in India's efforts to attract investors. Modi had shied away these controversial reforms in the first term, but was widely expected to usher in bolder reforms during his second term.
Sitharaman, the country's first woman finance minister in five decades, created a buzz Friday, by carrying the budget speech into parliament in a bright red traditional Indian style ledger instead of the customary leather briefcase, which was described as a symbol of its colonial past.
"It was high time for me to move out of the British hangover. Easy for me to carry also, very Indian," she later told reporters.
Her chief economic adviser, Krishnamurthy Subramanian, says it symbolizes a "departure from the slavery of Western thought."
The government expressed optimism the economy will pick up pace to grow at seven percent this year, and that India will become a $3 trillion economy in the coming years before surging even higher by 2025. Economists say the key test lies in India's ability to attract investors.