India Is Said to Keep Fiscal Tap Open to Revive Growth
Nirmala Sitharaman, India’s finance minister, speaks to members of the media as she leaves the North Block of the Central Secretariat building in New Delhi, India, on Monday, Feb. 1, 2021. (Photographer: T. Narayan/Bloomberg)

India Is Said to Keep Fiscal Tap Open to Revive Growth

India will stick with higher spending in the year starting April, allowing Prime Minister Narendra Modi to revive growth in the virus-ravaged economy.

The government will target a budget deficit of 6.8% of gross domestic product next fiscal year, according to people familiar, who asked not to be identified as the data isn’t public yet. The deficit will be 9.5% for the year ending March against a planned 3.5%, the people said.

India Is Said to Keep Fiscal Tap Open to Revive Growth

Finance Minister Nirmala Sitharaman had pledged before Monday that the government would look beyond fiscal deficits in its aim to revive Asia’s third-largest economy, which is expected to outpace the global recovery in the new fiscal. The government’s annual economic report card, released Friday, forecast an 11% rebound in the coming fiscal, following an estimated 7.7% contraction in the current year.

Bonds fell, with yields on the 10-year benchmark rising 2 basis points to 5.93% amid higher than expected budget deficit target. The rupee was little changed.

©2021 Bloomberg L.P.

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