New Delhi (AFP)

India on Monday unveiled a 2021-2022 budget with a focus on health and infrastructure, as the government seeks to revive an economy ravaged by the health crisis and prepares to endure a record economic contraction this year.

This vast country of 1.3 billion people has been hit hard by one of the strictest lockdowns in the world to fight the pandemic, suffering a 23.9% drop in growth in April-June and a contraction of the 7.7% savings forecast for 2020-21.

"This budget gives our economy all the opportunities it needs to relaunch and accelerate the pace of sustainable growth," Finance Minister Nirmala Sitharaman told Parliament during the presentation of the annual budget.

This budget devotes 30.6 billion US dollars to health programs, double the previous one, although it included 4.8 billion dollars dedicated to the ambitious campaign against the coronavirus to vaccinate 300 million people in the country by July.

The health sector has long suffered from chronic underinvestment, and in 2017 the country had just 0.8 doctors per 1,000 people, roughly the same level as Iraq, according to the World Bank.

Asia's third-largest economy was already suffering a sharp slowdown even before the pandemic.

India is the second most affected country in the world by Covid-19 with more than 10.7 million reported cases.

Infrastructure accounts for the second largest share of the budget, with some US $ 76 billion, an increase of 34.5% over the previous one.

These expenditures will be devoted to major projects, particularly road and rail networks.

The state's withdrawals - from its shares in the national carrier Air India and the country's largest insurance group Life Insurance corporation, in particular - will help it to raise $ 24 billion, according to the Minister of Finance .

But the sale of the two state-owned companies has already been planned for some time and the insurer's IPO project caused the departure of nearly 100,000 employees last year.

With lenders themselves grappling with a mountain of bad debt, Ms Sitharaman announced that $ 2.74 billion would be set aside to recapitalize state banks.

All of these expenditures will reduce the budget deficit to 9.5% of GDP for the fiscal year ending in March, said Ms. Sitharaman, against 3.5% initially planned.

The government plans to borrow an additional $ 1.1 billion to finance the deficit, she added.

In its annual economic report, the government expects a strong recovery, forecasting growth of 11% in the 2021-2022 fiscal year.

© 2021 AFP