India Is Said to Keep Fiscal Tap Open to Revive Growth

(Bloomberg) -- 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.

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.