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India's Budget Threat in Focus After Modi Loses Key State

  • Spending on rural vote set to climb ahead of next year’s poll
  • Budget deficit already under pressure as oil prices rise
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Modi’s loss of control of a key state will put pressure on his party to ramp up spending. Bloomberg’s Nag reports.(Source: Bloomberg)
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Prime Minister Narendra Modi’s loss of control of a key Indian state will put pressure on his party to ramp up spending to woo more rural voters, pushing back plans to rein in one of Asia’s largest budget deficits.

The budget was already under strain even before this weekend’s events in Karnataka -- the southern state where Modi’s Bharatiya Janata Party failed to form a government. The fiscal target was breached in the 2018 financial year, while the goal for this year was widened to 3.3 percent of gross domestic product.