NEW DELHI (Reuters) – India sought to boost growth in a federal budget on Saturday that raised spending on farms and expressways and offered cuts in personal taxes, but the measures fell short of market expectations and battered stocks.

Prime Minister Narendra Modi’s government is grappling with the country’s worst slowdown in a decade, with falling employment, consumption and investment ratcheting up the pressure to revive growth.

The government estimates growth this year to March 31 will slip to 5%, the weakest pace since the global financial crisis of 2008-09. It also warned an expected rebound the following year might entail a blow-out in fiscal deficit targets.

Finance Minister Nirmala Sitharaman, presenting the budget for the financial year beginning April 1, said 2.83 trillion rupees ($39.8 billion) will be allocated toward agriculture and allied activities, up 5.6 percent on the previous year.

The funds will be deployed to help farmers set up solar power generation units as well as establish a national cold storage system to transport perishables.

Sitharaman also vowed to spend $50.7 billion in coming years on a federal water scheme to address challenges facing one of the world’s most water-stressed nations.

Agriculture accounts for near 15% of India’s $2.8 trillion economy and is a source of livelihood for more than half of the country’s 1.3 billion population.

Sitharaman announced a new personal tax system including cuts for those ready to give up a myriad of tax breaks. She also abolished payment of dividend distribution tax by companies to spur investment.

“People have reposed faith in our economic policy,” Sitharaman said to the thumping of desks in parliament. “This is a budget to boost their income and enhance their purchasing power.”

Opposition parties slammed the budget, saying it had failed to address the slowdown in consumer demand and investment. “The government is in complete denial that the economy faces a grave macro economic challenge,” said former finance minister P. Chidambaram.

But higher government spending has put pressure on public finances, prompting caution from rating agencies. Sitharaman said the fiscal deficit for the current year would widen to 3.8% of GDP, up from 3.3% targeted for the current year.

Gene Fang, associate managing director, sovereign risk at Moody’s, said: “India’s 2020/21 budget highlights the challenges to fiscal consolidation from slower real and nominal growth, which may continue for longer than the government forecasts.”

GOVERNMENT SPENDING

For fiscal 2020/21 Sitharaman set the fiscal deficit at 3.5 percent. Moody’s said India’s government debt is already significantly higher than the average for Baa-rated sovereigns, a product of persistent fiscal deficits.

To help finance government spending, Sitharaman set a target for selling stakes in state firms at 2.1 trillion rupees for 2020/21, more than three times the amount expected this year.

She said the government will sell a part of its holding in state-run Life Insurance Corp, the country’s biggest insurance company.

But many experts said the measures did not go far enough to address the slowdown and structural flaws.

“In a normal scenario this budget would have been considered as good providing tax benefit to the common man, corporate and focus on farmers’ incomes, but the situation required more,” said Vinod Nair, head of research at Geojit Financial Services in Kochi.

Indian shares slid to a more than three-month low after a special trading session on Saturday, dented by what analysts said was a lack of sufficient stimulus measures. The NSE Nifty 50 index closed 2.5% lower while the benchmark S&P BSE Sensex fell 2.4%

“Markets had very high expectations from the budget … these expectations have not been met,” said Deepak Jasani of HDFC Securities.

The government also announced higher duties on a host of imports from walnuts to phone parts. Taxes on imports of pre-assembled printed circuit boards were raised to 20% from 10% and there were new taxes on mobile phones ringers and display panels in a bid to boost local manufacturing.

In its annual economic report released on Friday the government predicted growth would rebound to 6.0% to 6.5% in the fiscal year beginning April 1.

Some economists say global trade tensions and the outbreak of coronavirus in China pose a new risk to economic recovery by hitting cross-border commerce and supply chains.

($1 = 71.0700 Indian rupees)