(FE)
Prime Minister Narendra Modi will probably boost spending to retain young voters and those in India’s hinterland, who are straying away from his party as joblessness grows. The government will target a budget deficit of 3.2 of gross domestic product in the year starting April 1, according to a Bloomberg survey published this month, wider than the previous goal of 3 percent. Higher expenditure will stoke inflation that’s seen accelerating to 4.6 percent from 3.5 percent the previous year and boost GDP growth to 7.5 percent from a projected 6.7 percent. More people aged 18-25 are estimated to have voted for the opposition in an election in Modi’s home state of Gujarat, which ended with the ruling party getting its lowest seat tally in more than two decades.
His Bharatiya Janata Party was pushed across the finish line largely because of its urban voters, which is acceptable for this region because of its higher urbanization rate but could backfire in a slew of state elections next year and a national vote in 2019. “The BJP is unlikely to interpret these results as business-as-usual,” Neelkanth Mishra and Deepali Bhargava, analysts at Credit Suisse Group AG, wrote in a Dec. 18 report. They predict the budget due February will focus on rising farm distress and unveil cash transfers for fertilizer subsidies, crop insurance and possibly higher guaranteed crop prices.
