Indian government proposes $583B annual budget

NEW DELHI

The Indian government led by Prime Minister Narendra Modi on Sunday proposed a budget of $583 billion for the next fiscal year, beginning in April, with a focus on “productivity and competitiveness," as well as "resilience to volatile global dynamics.”

Finance Minister Nirmala Sitharaman, who proposed the budget to the parliament, said: “We face an external environment in which trade and multilateralism are imperilled and access to resources and supply chains are disrupted.”

The total expenditure is estimated at 53.5 lakh crore rupees ($583 billion), said Sitharaman.

She proposed to provide tax cuts, effective until 2047, to any foreign company that provides cloud services to customers globally by using data center services from India.

Sitharaman also proposed a basic customs duty cut on 17 drugs or medicines for those suffering from cancer.

The budget showed an increase of some 15% for defense spending, with an allocation of 7.85 lakh crore rupees ($85.4 billion), according to the Indian Defense Ministry.

Jaijit Bhattacharya, the head of the Centre for Digital Economy Policy Research think tank, described the budget as an “overall reforms-oriented budget, which stays within the guardrails of sticking to a reducing fiscal deficit glide path.”

“The tax holiday on data centers will drive India to become a global data center hub, similar to what Ireland did,” he said.

India’s gross domestic product (GDP) growth for the current fiscal year ending March is estimated at 7.4%, according to the Economic Survey 2025-26 submitted by Sitharaman in the parliament this week.

The GDP growth for the fiscal year ending March 2027 is projected between 6.8% and 7.2%.

The budget is all set to pass in the bicameral parliament as Modi's Bharatiya Janata Party holds a majority, along with its allies.