India’s finance minister has announced an unexpected rise in public spending for the next financial year in an attempt to revive its sluggish economy.
However, he vowed to cut the country’s deficit as he unveiled new taxes on the super rich as well as large businesses.
P Chidambaram said that increased foreign investment was key to reviving growth in India’s economy.
The budget comes at a time when India’s growth rate has slowed, hurt by both global and domestic factors.
Asia’s third-largest economy is projected to grow by 5% in the current financial year, far below the 7.6% growth projected in last year’s budget.
In his budget speech, Mr Chidambaram said that while restoring India’s potential growth remained a challenge, “there is no room for gloom and pessimism”.
He argued that China and Indonesia were the only Asian nations that were growing faster than India, and that achieving a high growth rate was “not beyond India’s capacity”.
“We have done it and we will do it again,” he said.
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