FACTBOX-What's in focus for India's high stakes federal budget

  • 1/29/2021
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Jan 29 (Reuters) - India’s ruling party has promised “game changer” plans to boost economic growth when Finance Minister Nirmala Sitharaman presents the 2021/2022 federal budget on Feb. 1. Here’s a look at some top topics she is likely to cover on Monday, as Prime Minister Narendra Modi’s government tries to bring the country’s economy back on track: ** HEALTHCARE SPENDING: India is likely to double healthcare spending in the next fiscal year with the aim of raising expenditure in the sector to 4% of gross domestic output in the coming four years, as the country looks to fix shortcomings exposed by the pandemic. The government could also increase a health tax from the current 1% of income and corporate tax to fund the new programme. ** PRIVATISATION DRIVE: India is likely to aim to raise $40 billion from privatisation of a whole host of companies in energy, mining and banking, and selling minority stake of large companies such as Life Insurance Corp. ** BAD BANK: India’s central bank is expecting a sharp rise in bad loans in the banking system due to the pandemic. Aiming to boost lending in the economy and improve the valuation of state-run banks before selling stakes in them, the government could finally announce the creation of a “bad bank”, where bad assets of state-run banks could be parked and later sold at a discounted price in the market. India has set itself an ambitious target of building infrastructure worth 1.02 trillion in the country. However, funding these infrastructure projects may be a challenge given the revenue constraints and strained banks" loan books. Sitharaman is likely to announce here a dedicated development financial institution to facilitate financing greenfield infrastructure projects. ** IMPORT DUTY: India is considering hiking import duties by 5%-10% on more than 50 items including smartphones, electronic components and appliances. The move to increase import duties is part of Modi’s “self-reliant India” campaign that aims to promote and support domestic manufacturing. (Compiled by Nivedita Bhattacharjee and Aftab Ahmed; Editing by Alex Richardson)

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