India pours money to combat rural unemployment putting growth ahead of fiscal wealth

Yesterday the Indian government announced that they are going to allocate 301 billion rupees ($6.2bn) towards a rural employment programme within the budget for 2009-2010.

The Minister of External Affairs Pranab Mukherjee also announced that within the budget, increases had been made for defense and that the total interim budget stands at 9,532.31 billion rupees ($196bn).

The interim budget was expected to focus primarily on a third stimulus package in order to avert the recession, although it is clear from the make-up of the budget that growth has been put first.

The budget focuses on increasing spending on education, healthcare, employment schemes to boost growth, although this does mean that the government will have to borrow more money.

Despite the size of the budget, India is still currently rated as investment grade by Standard & Poor‘s and its fiscal deficit was in line with the estimate as Mr Mukherjee has said the government needs to take extraordinary measures in order to deal with the slowdown.

To date, the recession is not that pronounced as the economy expanded by 9 percent in the year ending in March and is only estimated to slow to just over 7 percent.

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