India's budget shuns big-bang reforms, say experts

Indian office workers walk past a digital screen showing Indian Finance Minister Arun Jaitley delivering his Budget speech at Parliament in New Delhi, on Feb 28, 2015. The Indian government's budget was praised on Sunday, Mar 1, as balancing the
Indian office workers walk past a digital screen showing Indian Finance Minister Arun Jaitley delivering his Budget speech at Parliament in New Delhi, on Feb 28, 2015. The Indian government's budget was praised on Sunday, Mar 1, as balancing the need to boost business and help the poor, but some experts were disappointed at a lack of big-bang reforms. -- PHOTO: AFP

NEW DELHI (AFP) - The Indian government's budget was praised on Sunday as balancing the need to boost business and help the poor, but some experts were disappointed at a lack of big-bang reforms to Asia's third largest economy.

Finance Minister Arun Jaitley pledged more investment in crumbling infrastructure and cut the corporate tax rate on Saturday, when he unveiled the right-wing government's first full budget.

Jaitley also rolled out new pension, insurance and social security programmes for India's tens of millions of desperately poor, and tougher penalties for wealthy people who stash their cash overseas to avoid paying tax.

But some analysts were concerned that Prime Minister Narendra Modi did not use the budget to radically reshape economic policies after his party swept to power in a general election last May, pledging to reform the then-faltering economy.

"Given Modi's historic mandate last year, many people had hoped that this budget would signal a sharp and visible departure from business as usual," Sadanand Dhume, India expert at Washington-based think-tank the America Enterprise Institute, told AFP.

"Measured by that yardstick, it is indeed a bit of a disappointment," he added.

Some economists had been hoping Jaitley would slash the more than US$35-billion (S$48 billion) annual subsidy bill championed by the previous left-leaning government. Critics say the programme is inefficient and too expensive.

Others were anticipating the government would start privatisation of inefficient state-run banks and companies.

But political researcher Manoj Joshi said the government was mindful of the need to balance reform with helping the two-thirds of Indians still living on less than US$2 a day.

"The point is that the BJP is a political party and is making a budget in a country where there are many poor voters," Joshi, from the Delhi-based Observer Research Foundation, told AFP.

"They have tried to balance the issue of setting the stage for growth along with social equity."

Modi's Bharatiya Janata Party (BJP) last month suffered a drubbing in Delhi state elections, its first major defeat at the polls since it stormed to power.

Despite new figures showing the economy is growing faster than previously thought, critics say many ordinary Indians have yet to feel the benefit and are tired of waiting for change.