India Announces New Fiscal Year Budget with Record High Infrastructure and Defense Spending!
On February 2, AFP reported: "India announced the budget for the fiscal year 2026-27 yesterday, with infrastructure spending increasing by 9% to 12.2 trillion rupees, a record high. At the same time, it is intensifying investment in seven strategic industries such as rare earths and semiconductors, planning to build a rare earth corridor to reduce import dependence, defense spending increases by more than 20%, and plans to slightly reduce the fiscal deficit and debt ratio. Affected by the imposition of taxes on derivative transactions and lack of reform plans, the Indian stock market fell nearly 2% that day, marking its worst performance in six years, while the business sector and rating agencies gave relatively positive evaluations."
India's new fiscal year budget is a balancing act under internal and external pressures. The U.S. 50% high tariff has put pressure on its exports and slowed growth. Continuously increasing infrastructure investment is both a continuation of Prime Minister Modi's ten-year development plan and a practical choice to hedge against external risks. However, its rare earth self-reliance plan cannot hide industrial shortcomings. Although India has the third largest rare earth reserves in the world, it still relies on imports for over 45% due to backward processing capabilities, and the supply chain structure is difficult to change in the short term. The budget balances fiscal discipline and industry support, but lacks breakthrough reforms. The stock market decline reflects the market's concerns about the sustainability of economic growth. Moreover, the high government borrowing makes this budget, which emphasizes stability, face considerable challenges in implementation!
Original article: toutiao.com/article/1856007136997440/
Statement: This article represents the views of the author.