India's government to spend $40b on farm sector

It will spend billion more in water scheme to get broader economic growth back up

NEW DELHI: India's government said on Saturday it would inject nearly $40 billion into the sprawling farm sector and billions more into a federal water scheme to get broader economic growth back up from its lowest in a decade.

Finance Minister Nirmala Sitharaman, while presenting the 2020/21 budget for the financial year beginning April 1 to parliament, said the fiscal deficit for the current year would widen to 3.8% of gross domestic product, up from 3.3% targeted for the current year.

For fiscal 2020/21, Sitharaman set the fiscal deficit at 3.5% as it boosts state funding to shore up a sagging economy that has put pressure on Prime Minister Narendra Modi, who is already facing a public backlash over a new citizenship law seen as socially divisive.

To help generate revenue, she also announced the government will reduce stakes in the country's largest insurer Life Insurance Corporation as part of its divestment programme.

India is grappling with its worst economic slowdown in a decade. The government estimates economic growth this year, which ends on March 31, will slip to 5%, the weakest pace since the global financial crisis of 2008-09.

Sitharaman said that 2.83 trillion Indian rupees ($39.82 billion) will be allocated for agriculture and allied activities including helping farmers set up solar power generation units as well as establish national cold storage to transport perishables.

"Farm markets need to be liberalised, farming needs to be made more competitive," she said.

She also said the government will spend $50.65 billion on a federal water scheme to address the challenges facing one of the world's most water-stressed nations.

Agriculture accounts for 15% of India's gross domestic and a source of livelihood for more than half of the country's 1.3 billion population.

Sitharaman further said, "Water stress-related issues are now a serious concern across the country," and that the government is proposing comprehensive measures for 100 such water-stressed districts.

Indian shares got off to a choppy start in a special trading session on Saturday ahead of the budget.

In early trade, shares slipped in reaction to an overnight shakeout in global markets on growing concerns about the economic impact of the coronavirus outbreak in China.