The government unveiled a fire-fighting Budget on Monday that seeks to win back support among rural voters for Prime Minister Narendra Modi's government and sustain growth against a grim global backdrop - all without borrowing more.
Finance Minister Arun Jaitley's third Budget seeks to address rural distress as two-fifths of the countries families, who rely on farming, are reeling from back to back droughts.
At the same time the budget hiked public investment in infrastructure by 22.5 per cent, while taking further steps to revive corporate investment that PM Modi needs to create new jobs.
"We have a shared responsibility to spend prudently and wisely for the people, especially for the poor and downtrodden," the 63-year-old Finance Minister told lawmakers in his 100-minute Budget address.
"Farmers are our biggest focus," said PM Modi after Mr Jaitley's speech. The government is calling it a 'vikas ka Budget' or Budget for development.
"We have seen politics over the poor for a very long time," the PM said adding that today's Budget would power rural India towards economic growth.
"By not focusing the benefits of #UnionBudget2016 on the #suitboot people Arun Jaitley has cleverly made the opposition's job a bit tougher," tweeted former Jammu and Kashmir Chief Minister Omar Abdullah.
The BJP calculates that a big defeat in assembly elections in Bihar last November was the result of the opposition successfully attacking the government as a "suit boot ki sarkar (government for the rich)."
Assembly elections will be held in several states in the next one year, including in farming states like West Bengal in a few months and then in Uttar Pradesh and Punjab in 2017. A strong showing will be vital to PM Modi's chances of a second term in 2019.
Despite commanding a large majority in Parliament's lower house, the Lok Sabha, the Modi government, in a minority in the Upper House or Rajya Sabha, has failed to pass several key measures since sweeping to power almost two years ago, raising doubts over the impact of its reform agenda.
Despite hefty commitments on rural welfare and health, Mr Jaitley managed to stick to his fiscal deficit target of 3.5 per cent of gross domestic product or GDP for the 2016-17 fiscal year that starts on April 1 - a pledge that may open the way for an early interest rate cut by the Reserve Bank of India.
"This Budget deals with the reality of India," the Finance Minister said at a press conference after his Budget presentation. "The Finance Minister has an onerous job, he has to spend more and maintain 3.5 per cent fiscal deficit. Therefore he needs resources," Mr Jaitley said.
"At first sight, it's a good Budget, a fire-fighting budget," said Amitabh Dubey, director of India research at Trusted Sources.
"Rural demand is weak, private investment is dead in the water and, of course, we have a banking crisis," he added. "They've announced some ease-of-doing-business-measures that are positive. But, in other ways, it's a classic tax-and-spend budget."
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