For the budget in India, they are walking between job creation and a government of deficits | Poverty and development

Mumbai, India – According to Salgaonkar, he wakes up a few hours before dawn and starts cooking food at his home in suburban Mumbai for sale. Her son Amar returns from work only when the sun is significantly above and ended up with almost 100 pairs with a vegetable filling.

Salgaonkar lost her job in a non -profit organization almost a year ago, and her son Amar, 35, lost his job by selling mobile phones and data plans six months ago. Without the merchants, they were eventually engaged in temporary work, traveling nights to transport trucks, helping drivers in negotiating with police and other officials.

This week, as Minister of Finance Nirmal Sitharaman, it is a budget on March 1, she will have to find a way to encourage growth and employment for millions of people like Salgaonar, who are struggling to find a permanent job, holding the goals of fiscal deficits.

“We’re not sitting at home,” he says, according to how they ended up in these temporary jobs. She quickly states that they hit the vegetable prices, leaving her a little money to settle the costs and save for Amar’s wedding, which now seems like a distant dream given that she does not have a stable job.

The growth of the gross domestic product (GDP) in India fell to 5.4 percent for the quarter that ended in September 2024, the latest available data and the strongest in seven quarters. Growth is expected to slow down 6.4 percent for the fiscal year, which ended on March 31, which is the rarest in four years. However, “there is no room for fiscal indulgence”, or increasing state consumption on starting growth, says Dhiraj Nim, an economist from Anz Bank.

Increased state consumption during the pandemic led to an Indian fiscal deficit to a 9.3 percent in the fiscal year, which ended in March 2021. Sitharamanan said she plans to reduce her to 4.9 percent this year and below 4.5 percent next year.

Economists say that poor consumer demand and low capital investment by private companies have withdrawn the economy.

“Some economists, including me, have marked that demand for post-chat is a problem,” says Sunil Sinha, a professor of economics at the Institute for Development and Communications, Chandigarh.

Demand for goods and services recovered at the level before pandemic only in certain areas, such as rich Indians, for international tourism, luxury cars and other premium products, says Sinha. But the demand for mass consumption products, such as soap, shampoo and biscuits, remained low and fell further in the last quarter.

Amar, who worked for nine years in the Indian Procvat Sales Sector of the Mobile Devices, revealed that, after pandemic, the sale of mobile phones and data plans was more difficult, friends and colleagues were dismissed from work and finding a new job.

‘Limit’ to state consumption

In the last decade in power, the Government, led by Prime Minister Narendra, spent funds on the construction of highways, bridges and other major infrastructure projects to create growth and employment. But it is no longer possible to give fiscal consumption goals.

“There is a limit of how much the government can stimulate growth,” says Nikhil Gupta, the main economist in Motillal Oswal Securities, a security company based in Mumbai. “We are too burdensome to the government expecting to increase the growth a lot.”

The Indian investment in the private sector in construction capacities remained low, despite the reduction of tax rates in 2019 to 22 percent with 30 percent for companies.

Sinha says corporate consumption would only come with the visibility of demand, which remained weak.

This walk in a stimulating demand without excessive wear was also more difficult with a new administration in the United States.

“The government will adhere to [fiscal deficit] The goal, in order to want to signal the confidence that it has its own costs under control, especially when the capital flows were unstable due to changes in policies around the world, “says Rumki Majjdar, an economist at Deloitte India’s professional services.

Trump’s threat

Foreign investors sold shares worth more than $ 8 billion on the Indian Stock Exchange this January, when President Donald Trump took his duty because the dollar strengthened and Trump promised to support US companies compared to other countries. In this period, Indian reserves of foreign currencies have also fallen.

Trump’s administration has threatened to import import tariffs and questioned the need for H-1B visa for highly qualified professionals, which could affect the Indian Technology Sector.

“The Trump camp is quite colorful, visible discussion of skillful workers’ visas. So it is too early to predict that it will be played,” says Rick Rossow, the Chairman of India and the Asian Economy in the Center for Strategic and International Studies (CSIS), Washington , Think Tank based in DC.

Trump’s tariffs to Chinese products could lead to relocation to India, the efforts of India tries to encourage India in the last few years of trade war between Washington, DC -ai Beijing. However, New Delhi had mixed success.

“The US pressure to reduce excessive relying on Chinese production helped India to enter several technological investments in sectors such as semiconductors and solar production. However, India is expected that under Trump cannot expect the US government to continue to encourage US companies in these sectors to ” friend ‘in India. India will need to win investments based solely on home market conditions, demanding aggressive reforms on [federal] And national levels, “Rossow said.

Sinha says that many such narrow throats for investors, including the procurement of land, water and power, are now in the hands of state governments, many of which dealt with high unemployment and poor consumer demand, offering election SOPs, such as cash manuals. This probably adversely affected the state finance deficit.

Salgaonkar, for example, says that it has benefited from the Government’s Maharashtra scheme that gives women a monetary brochure of 1,500 rupees ($ 17) per month. This helped her balance the uncertain household budget.

But Gupta Motilal Oswal says, “We have to wonder, are these schemes needed? What is the basis on which these schemes are designed? Are they just a political means? Structurally speaking, we don’t like and there is a limit of how much I can stimulate growth. “

The need for a plan

If the state governments spend on capital expenditures, such as smaller buildings, it could lead to employment more than large Union’s infrastructure projects that are increasingly mechanized, Sinha says.

The Government must also improve access to work, land, capital to increase production, which in turn will help to create jobs, says Deloitte’s Majjdar.

The Indian growing construction sector, which is also the second largest employer after agriculture, could also encourage the budget, says Motilal Oswal’s Gupta.

Although it was discussed whether a relief from income tax rates could be obtained, economists disagree that this could lead to increased demand from the lower middle class of India.

Although slow demand is an increasing problem in the economy, Sitharaman said that slowdown “is not systemic”. The slowdown in the last quarter was followed by the slowdown of public investments in the election year, during which the Governments were forbidden to influence the election outcomes by the Indian Election Commission, she said. Sitharaman expects growth to recover in the next quarter.

Salgaonkar has its own recipe for Sitharaman: lower prices, increases the purchase of capacity by creating jobs or both.

Inflation increased to 6.2 percent in October, reaching the maximum of 14 months and surpassing the goal of the central bank of 4 percent, and Salgaonkar speaks of growing wheat prices, cooking gas and clothing, among other essential items, while revenue in her home fell .

Although the investments in physical infrastructure are likely to continue despite fiscal limitations, Anz -Is Gupta says: “I think the establishment of a vision and the way to improve human capital is India [by improving skills and education] There will be a welcome step. ” This could be the only long -term way to increase growth in the most influx of country and the fifth largest world economy.