REUTERS, New Delhi

India’s government will step up spending to 39.45 trillion rupees ($529.7 billion) in the coming fiscal year to build public infrastructure and drive economic growth, it said on Tuesday, but it involves a wider fiscal deficit than targeted and record borrowing.

Asia’s third largest economy has been on the mend after the government lifted mobility measures in June to curb the spread of coronavirus, after contracting 6.6 per cent in the previous fiscal year.

Finance Minister Nirmala Sitharaman, presenting the annual budget to parliament, said total government spending in the 2022/23 fiscal year beginning in April will be 4.6 per cent more than the current year.

Trillions of rupees will be allocated to expressways, affordable housing and solar manufacturing to put growth on a firmer footing, she said.

Growth is estimated to be 9.2 per cent for 2021/2022, coming off the low base and slowing to 8 to 8.5 per cent in the coming fiscal year, still the fastest among the world’s major economies.

The recovery from the pandemic has been swift but incomplete, officials say. Private consumption has been hampered by a lack of jobs, depleted household balance sheets and wider income inequalities.

Sitharaman said public investment must continue to take the lead and pump prime private investment and demand.

“The economy has shown strong resilience to come out of the effects of the pandemic with high growth. However, we need to sustain that level to make up for the setback of 2020/21,” she said.