India’s Prime Minister Narendra Modi will recalibrate budget priorities in 2016 to focus on social initiatives, such as the country’s first major crop insurance scheme, while capping previously prioritised infrastructure spending, officials say.
Modi splurged on roads and railways this year in a strategy to spur economic growth. But it came partly at the expense of federal programmes for farmers and the poor, suffering through back-to-back drought years.
In the first confirmation of a shift in strategy, a senior government source with knowledge of deliberations for Modi’s second full budget said New Delhi would focus more on the social sector following what he described as a “shocking” defeat in last month’s state elections in largely rural Bihar.
It was unlikely more money would be freed up for infrastructure when the budget is unveiled in February, he said, because the government is trying to keep spending on track to lower the fiscal deficit.
Commitments to raise government salaries, military pensions and to infuse capital into state banks reeling under bad loans have left little room for additional spending. What money is left, sources say, will be earmarked for the social sector — especially rural districts that house three-fifths of voters.
The renewed focus on social-welfare programmes precedes crucial state elections in heartland farming states such as West Bengal next year and Uttar Pradesh in 2017.
