India’s government on Monday proposed to increase spending on health care in a $477bn budget for 2021-22 that promises extra help for weathering the coronavirus pandemic.
India is in its worst economic slowdown in a decade. The budget proposal presented to parliament by Finance Minister Nirmala Sitharaman also focuses on developing financial institutions and shoring up infrastructure to get the pandemic-ravaged nation back on track as the world’s fastest-growing major economy.
Sitharaman said the government plans to spend 30.20 billion US dollars on health care over the next six years to improve an underfunded health system that has creaked under the additional burden of the pandemic, which has killed more than 154,000 Indians so far.
India currently spends about 1% of its gross domestic product on health, the lowest among major economies.
Sitharaman also announced $4.81bn to be earmarked for making more Covid-19 vaccines.
India is providing two vaccines: the AstraZeneca shot manufactured locally by Serum Institute of India and another made by Bharat Biotech.
More than 3.5 million people have been vaccinated so far.
The government’s budget lays out a series of initiatives. It lifts caps on foreign investment in its insurance market; provides funds for recapitalization of state-run banks that are saddled with bad loans and proposes exemptions for senior citizens for filing income tax returns.
Under the plan, the fiscal deficit for the current year would widen to 9.5% of gross domestic product, Sitharaman said. She set the fiscal deficit at 6.8% of GDP for fiscal 2021-22.
The government hopes to get that below 4.5% in the next three years, she said.
Battered by the coronavirus pandemic, India’s economy shrunk by 7.7% in the 2020-21 financial year, the deepest contraction in four decades, according to a report released last week.
Contrary to expectations, the proposed budget did not promise extra support for the country’s farmers who have been protesting for more than two months against new agricultural laws which they say will favor large agribusiness and corporations.
Those protests have posed the biggest political challenge for Modi since he took office in 2014, in part because farmers are the most influential voting bloc in the country.