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India may seek $7.5 billion in extra spending to spur growth

India may seek parliamentary approval to spend about $7.5 billion more on roads, railways and other public programs over the next five months, two government sources said, as Prime Minister Narendra Modi looks to spur growth and create jobs. The new spending, details of which are still being worked out, would come at a time when private investment has plunged, leading to a slowdown. It would also coincide with the run-up to a crucial state election early next year in Uttar Pradesh, Indian’s most populous state that is home to more than 200 million people. At $7.5 billion, the additional spending would represent about 2.5 percent of the total budgeted so far for the current fiscal year. While some of his government’s development initiatives, such as electricity, bank accounts and cooking gas, have started reaching people in the country’s vast rural hinterland, the administration has struggled to create enough jobs to meet their aspirations. Modi has promised to create 250 million jobs over the next decade, but Asia’s third-largest economy is not growing fast enough to absorb the roughly 1 million young people who enter the job market every  month. Unemployment rose to 5 percent in 2015/16, from 3.8 percent in 2011/12, government data showed. With private sector investment still failing to take off amid tepid demand and tight credit, Modi is left with little choice but to lean on public spending to fill the gap.

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