Modi Allocates Billions for Jobs, Key Allies in Post-Election Budget

India Unveils $24 Billion Job Boost and Rural Development Plans in 2024/25 Budget

NEW DELHI - India's Finance Minister Nirmala Sitharaman announced a substantial $24 billion investment aimed at job creation over the next five years, alongside a significant increase in rural development spending. The new budget comes in the wake of a recent electoral setback for the ruling government, which analysts attribute to turmoil in rural regions and a fragile job market. Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) lost its absolute majority and now relies on coalition partners to govern.

Rural Development and Job Market Focus

The government will allocate 2.66 trillion rupees ($32 billion) towards rural development, introducing new schemes particularly designed for states governed by key allies. To address employment issues, the budget includes incentives for companies, particularly in the manufacturing sector, along with programs to enhance skills and provide subsidized loans for higher education. Official statistics show a 6.7% unemployment rate in urban areas, though private estimates suggest it might be as high as 8.4%. Despite government claims of generating 20 million new job opportunities annually since 2017-18, private economists highlight that many of these jobs are in self-employment or temporary agricultural roles.

Consumer and Infrastructure Spending

Following the budget announcement, India's consumer stocks soared by 1.5% to an all-time high. Additionally, the government has pledged to sustain investment in long-term infrastructure projects, amounting to 11.11 trillion rupees. Included in this are long-term loans totaling 1.5 trillion rupees offered to states to support such expenditures. Some loans will be tied to specific reform milestones in areas like land and labor, which the government aims to advance in its third term.

Support for Key Allies

In a gesture towards the government's coalition partners, Sitharaman emphasized quick disbursement of loans from multilateral agencies to the states of Bihar and Andhra Pradesh. Additionally, the government plans to cut its fiscal deficit to 4.9% of GDP for 2024-25, down from the 5.1% figure stated in February's interim budget. Gross market borrowing will be slightly reduced to 14.01 trillion rupees.

With these measures, the government aims to address critical economic challenges, strengthen its political alliances, and possibly regain voter confidence in future elections.