AFP, Mumbai :
India relaxed its fiscal deficit target Saturday, raising spending and slashing taxes as it seeks to attract foreign investment and increase consumption in the wake of a prolonged economic slowdown.
Finance Minister Nirmala Sitharaman announced the changes as part of the country’s annual budget in parliament, a day after official data showed that Asia’s third-largest economy grew five percent last year, its slowest expansion since the 2008 global financial crisis.
In a sprawling three-hour speech peppered with references to ancient Indian history and poetry, Sitharaman said the fiscal deficit target for the current financial year was now 3.8 percent of GDP, up from an earlier 3.3 percent.
It will edge down to 3.5 percent next year, she added.
Prime Minister Narendra Modi’s right-wing government has been trying desperately to revive the economy, which has flagged for several quarters, with per capita consumption falling for the first time in four decades.
The finance minister said Indians earning under 1.5 million rupees ($21,000) a year could pay lower taxes if they agreed to forego existing exemptions, with a view to raising their purchasing power.
Indian taxpayers are allowed to claim exemptions for a range of expenses, from medical insurance to vacation spending, under a labyrinthine tax regime that Sitharaman has vowed to simplify during her tenure.
She also announced that companies would no longer have to pay dividend distribution tax, terming it a “bold move meant to attract foreign investors”.
India relaxed its fiscal deficit target Saturday, raising spending and slashing taxes as it seeks to attract foreign investment and increase consumption in the wake of a prolonged economic slowdown.
Finance Minister Nirmala Sitharaman announced the changes as part of the country’s annual budget in parliament, a day after official data showed that Asia’s third-largest economy grew five percent last year, its slowest expansion since the 2008 global financial crisis.
In a sprawling three-hour speech peppered with references to ancient Indian history and poetry, Sitharaman said the fiscal deficit target for the current financial year was now 3.8 percent of GDP, up from an earlier 3.3 percent.
It will edge down to 3.5 percent next year, she added.
Prime Minister Narendra Modi’s right-wing government has been trying desperately to revive the economy, which has flagged for several quarters, with per capita consumption falling for the first time in four decades.
The finance minister said Indians earning under 1.5 million rupees ($21,000) a year could pay lower taxes if they agreed to forego existing exemptions, with a view to raising their purchasing power.
Indian taxpayers are allowed to claim exemptions for a range of expenses, from medical insurance to vacation spending, under a labyrinthine tax regime that Sitharaman has vowed to simplify during her tenure.
She also announced that companies would no longer have to pay dividend distribution tax, terming it a “bold move meant to attract foreign investors”.
