Indian government pledges £125m to improve women's safety

Amount for fund, named after woman who died following gang rape on bus in Delhi, criticised for being 'grossly inadequate'

The Indian government will set up a £125m fund to pay for measures to improve women's safety in the country, hit by an unprecedented wave of sexual violence in recent years, its finance minister has said.

During his annual budget speech to parliament on Thursday, Palaniappan Chidambaram said the fund would be named after the 23-year-old woman who died following gang rape on a bus in the capital, Delhi, in December. Though not formally identified, she has been dubbed Nirbhaya (fearless one) by the Indian media. Five men and a minor are currently on trial for murder.

The attack triggered mass protests and calls for widespread policing and legal reform as well as criticism of a government that campaigners said had consistently failed to deliver basic public services, such as security, especially to women.

In his budget, Chidambaram referred to "recent incidents [that] have cast a dark shadow" and also announced the creation of a India's first bank just for women.

Activists immediately dismissed the measures as "tokenism".

"The government clearly felt they had to do something but the money is grossly inadequate. It works out at a few rupees for each woman in the country" Ranjana Kumari, director of the Delhi-based Centre for Social Research, told the Guardian.

Kumari, who is also a member of the National Commission for Empowerment of Women, added: "We have been asking for money to properly implement laws on domestic violence and to improve our terrible record on maternal mortality but there was nothing."

Chidambaram also announced during the budget a range of measures that he clearly hoped would reconcile demands from senior leaders in the Congress party – which leads a coalition government – for major public spending schemes to win votes with the need to boost economic growth, which has slowed to 5%.

There will be a series of crucial state elections this year and a national parliamentary election by mid-2014.

Chidambaran spoke of the need to reassure international markets and investors while improving access to food and education to hundreds of millions of Indian's who still live below the poverty line.

His budget will see an increase in public spending, with a 14% rise in the defence budget and investments in roads and ports, but also a rise in taxes on the very wealthy, big business and luxury products such as high-end mobiles, yachts and foreign-made cars. Despite a slowdown in growth, demand for vehicles costing up to a hundred times the average annual income remains strong.

Analysts have been concerned by the government's growing fiscal deficit at a time of pressing need to provide education and skills for an expanding youthful population and invest in a crumbling infrastructure while funding huge subsidy systems aimed at the rural poor.

"On the one side is the economic policy, on the other side is economic welfare. We are a developing country. The link between policy and welfare can be expressed in a few words: opportunities, education, skills, jobs and income," the finance minister said.

The current government, after years of slow movement on reforms that experts say are essential to return India to growth rates of 8%-9%, has begun to push a series of measures since the autumn.

"The gloom is beginning to lift. Indian macros are still in stress but the recent measures have had an effect. They do give a confidence that the government is beginning to address issues," Shubhada Rao, chief economist at Mumbai-based Yes bank, said earlier this month.

Rao said she believed that growth of 6.5% for 2013 to 2014 was likely.

India's prime minister, Manmohan Singh, hailed the new budget, saying the country should get back to 8% growth in two to three years.

"This country must not lose any time - India must get its act together to accelerate the tempo of growth," Singh said in a TV interview after the budget speech.

Opposition politicians criticised the budget as "cosmetic" and "dull and boring".

It is certainly unclear if the measures taken are enough to dispel growing gloom in India or to restore international confidence, hit hard by a series of major corruption scandals and a threat, now apparently lifted, of high retrospective taxation on earnings in India.

Deep divisions remain within the Congress party too. Many party leaders still favour massive public redistribution of wealth and are suspicious of any further "liberalising" reforms which they say benefit only the rich.

Others, such as Chidambaram and Singh, argue that without growth ambitious populist projects such as a putative right to food law cannot be financed.

Economist Gurcharan Das, author of India Grows At Night, believes the country will reach "middle-income status" with a per capita income of around $6,000 (£4,000) by about 2030.

"We should get there the way we are through incremental reforms. It will be frustrating but we will get there. If we get a reformer [as a leader] it may be sooner. If there is a major disaster, it may be later by a few years," he said.

Speaking to local channel NDTV, the father of the victim of the December gang-rape murder said that the creation of the new fund to improve women's safety was an "honour" and that he hoped it would "help women".


Jason Burke in Delhi

The GuardianTramp

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