India sticks to incremental reforms despite slowdown

A PARADOX in India is that Prime Minister Narendra Modi's most ardent supporters see him in the Margaret Thatcher mould. They vote him to power expecting bold economic reforms, reduction in the size of the government and a private sector-driven economy.

And yet, from the evidence seen over the five years that Mr Modi has been prime minister, he's a cautious economic reformer and in some aspects a socialist who believes in state intervention to help marginalised groups. It is of no surprise, therefore, that the first Budget presented after the just concluded general election, by India's new finance minister, Nirmala Sitharaman, focuses on small steps and tweaks to tackle the crisis in the Indian economy - the twin problems of a lack of sustained growth and low investments.

In a typically cautious approach, Ms Sitharaman stuck to the government's borrowing target announced in an interim budget in February and cut the fiscal deficit target to 3.3 per cent of gross domestic product (GDP) for the current fiscal year ending March 31, 2020, from an earlier, upwardly-revised target of 3.4 per cent. According to Reuters, given the crisis in the economy, some forecasters had expected a fiscal stimulus in the form of a deficit as high as 3.7 per cent.