Mumbai, Feb 16 (ANI): Market analysts in Mumbai believe that growth remains the primary concern for the Indian economy as the government tries to stimulate demand.
With elections just months away, the government sought to highlight its economic achievements while presenting the interim budget for 2009-10 on Monday.
A key highlight of the budget was the increased allocation towards the defense sector. Mukherjee claimed that the cross-border terrorism has been given a new dimension after the recent Mumbai attacks.
He reiterated the government's claim that it would continue to stimulate demand in the Indian economy, which is expected to grow at 7.1 percent in spite of the global slowdown.
The minister also announced an extension of interest subsidies to debt-hit farmers.
However, according to the investors, this move only suggests the government's intention to stimulate its rural vote bank ahead of elections.
Investors have described the budget as being completely election-centric.
"This is not a full fledged budget. Earlier, the government used to get away by coming up with a good budget during the election year to please the people. But now the people are smart. They cannot be fooled easily," said investor Mansood Pervez.
Mukherjee suggested the government needed to accelerate policy reforms, including in the financial sector, and that social security nets needs to be strengthened.
He informed that the fiscal deficit had risen to six percent of the gross domestic product in 2008-2009 from a planned 2.5 percent, a rise that could shake investors who are increasingly wary of emerging markets.
He further predicted a deficit of 5.5 percent of GDP in 2009-10 but implied this could rise if further economic stimulus was needed.
Faced with a faltering growth, the government has announced two stimulus packages, including extra spending of four billion dollars.
It also unveiled plans to borrow 460 billion rupees by March to fund its stimulus measures and meet the nation's extra spending needs.
The BSE Sensex extended losses to three percent on Monday, with investors disappointed with the interim budget, which they said had failed to announce a further economic stimulus.
The Prime Minister's Economic Advisory Council expects growth to hold at around similar levels in 2009-10, though economists feel the aim is unrealistic.
In the five budgets since 2004, the Congress party-led coalition has increased spending on health, education and rural employment.
However, the initiatives have failed to please the analysts who maintain that the economy has suffered due to a lack of economic reforms. (ANI)