New Delh:- The government paraded its economic achievements on Monday and promised help for the rural sector as it tried to shield the economy from a global credit crunch and stem job losses with elections just weeks away.
Acting Finance Minister Pranab Mukherjee began charting spending plans for the 2009/10 fiscal year from April to July, a stop-gap measure to take care of essential spending during and in the immediate aftermath of general elections.
The minister announced an extension of interest subsidies to debt-hit farmers, one of the first measures in his budget speech.
The spending plans are effectively a political manifesto of the Congress-led United Progressive Alliance Government since nationwide elections in the world's biggest democracy must be held by mid-May.
"Extraordinary economic circumstances, very extraordinary measures, now is the time for such measures," Mukherjee told Parliament.
Faced with faltering growth, the government has already announced two stimulus packages, including extra spending of $4 billion, while for its part the central bank has cut its key lending rate by 350 basis points since October to 5.50 per cent.
The government has also unveiled plans to borrow Rs 460 billion ($9.45 billion) by the end of the fiscal year in March to fund its stimulus measures and meet extra spending needs.
The government estimates that growth in Asia's third-largest economy will slip this fiscal year to 7.1 per cent from nine per cent or more in the past three years.
"In these difficult times, when most economies are struggling to stay afloat, a healthy 7.1 percent rate of GDP growth still makes India the second fastest growing economy in the world," Mukherjee said.
Data has shown the global slowdown is hurting key sectors including exports, housing and manufacturing. Analysts say anything under six per cent growth is perceived as a recession by many Indians, with investments curtailed and jobs losts.
The Prime Minister's Economic Advisory Council expects growth to hold around similar levels in 2009/10, although private economists see that as too optimistic.
In its five Budgets since 2004, the UPA Government has raised spending on health, education and rural employment but analysts say the economy has suffered due to a lack of economic reforms.
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