On February 29, 2016, Narendra Modi’s government released their third budget. The main sectors targeted in this budget will be social, farm and rural sectors. While in the first two budget’s the government focused its’ spending on developing India’s infrastructure sector and attracting greater foreign direct investment, this year’s budget depicts a change in strategy. Allocating more towards welfare programs for farmers, vulnerable populations, and the rural economy.
Agriculture + Rural Sector: The budget increased the allocation towards the agriculture sector by nearly 40 percent. The objective is to double farmers income over the next five years (by the year 2022). Additionally, funding will be allocated to building a long term irrigation system, resilience against extreme weather (including monsoon and drought), creating a unified agriculture market e-platform organic farming, accessible soil testing and enhanced production of pulses. The government also plans on continuing the facilitation of credits for and interest subsidies for farmers
Energy: A key energy deliverable within this budget is to achieve 100 percent rural electrification in all villages, by May 1, 2018. Funding will be also allocated towards nuclear power generation, exploiting further nuclear energy, and oil & gas opportunities and deep water gas exploration. Renewable energy will also be promoted in this budget, with a focus on providing liquefied gas connection to poor households in efforts to reduce health and environmental hazards from cooking with open fires.
Infrastructure: The government will continue working towards the goal of physical infrastructure with particular focus on highway, road construction and port developments.
Education, skills, job creation: To further enhance the opportunities to India’s skilled workforce, this years budget will focus also on improving infrastructure at higher education institutions and entrepreneurship training. Funding will be attributed to creating and further developing multi-skill learning institutes and online courses. These projects tie into the existing Skill India initiatives under the government.
Health: The government announces efforts to start a new National Dialysis Services Programme and enhance the services provided across district hospitals. Additionally, a new health protection scheme to enhance health coverage particularly amongst the vulnerable populations will be developed.
Financial sector and investment: The budget announced that 100% FDI will be permitted in marketing of food products produced and manufactured in India, and in asset reconstruction companies. Additionally, the government proposes to introduces a Centre State Investment Agreement to ensure effective implementation of Bilateral Investment Treaties for countries signing with India. This will ensure monitoring and delivering on obligations of State governments under these treaties. The government also planes to introduce a Public Utility bill to streamline concession agreements. Additionally, the budget announced allocation towards recapitalization of public sector banks and further strengthening of monetary policy frameworks. Last the budget calls for general insurance companies to be listed on stock exchanges.
Implications on Canada
India’s budget presents some opportunities for Canada to benefit from, particularly the measures in place for ease of doing business in India. This includes the 100% foreign direct investment (FDI) in marketing of food products, the revision of guidelines and renegotiation concession agreements and public private partnerships and the introduction of the Centre State Investment Agreement ensuring the effective implementation of all bilateral investment treaties.