India may boost rural spending by 50% next year to spur jobs, housing

India may increase rural spending by nearly 50% to 2 trillion rupees ($24.51 billion) next fiscal year, as the country seeks to boost jobs

India may increase rural spending by nearly 50% to 2 trillion rupees ($24.51 billion) next fiscal year, a source familiar with the matter told Reuters, as the country seeks to boost jobs and affordable housing before the national elections.

Finance Minister Nirmala Sitharaman is likely to present the 2023/24 budget on Feb. 1, the last full budget before the 2024 national elections. India's fiscal year starts on April 1 and runs through March.

The Indian government had allocated 1.36 trillion rupees towards the rural development ministry for the current fiscal year but it could end up spending more than 1.60 trillion rupees, according to two government sources who wished to remain unnamed as the information is yet to be made public.

They said the increased spending is mainly to address pandemic-driven stress in rural areas that has driven up demand for the country's only minimum job guarantee scheme, which pays $2 to $3 a day.

India's finance and rural development ministries did not immediately respond to requests for comment.

Coming out of the pandemic, the Asian country's rural areas were under pressure from rising prices and limited non-farm job opportunities, forcing more people to sign up for the government's job scheme - the Mahatma Gandhi National Rural Employment Guarantee Scheme, or MNREGA.

Led by Prime Minister Narendra Modi, the Bharatiya Janata Party swept the national elections for the second time in 2019, making him one of the most popular leaders of the country since its independence.

Modi, however, has had a mixed record of managing the economy and he has been criticized for rising unemployment.

The rural unemployment rate has remained above 7% for most of the months in the current fiscal year, according to data from the Centre for Monitoring Indian Economy (CMIE), a private think-tank.

The rural unemployment rate was 8.04% in October, according to CMIE.

For the current year, the government had initially budgeted 730 billion rupees for the job scheme and 200 billion rupees for the housing scheme. It has already spent 632.6 billion rupees on the jobs programme, according to the rural development ministry's website.

($1 = 81.7550 Indian rupees)