The Finance Ministry proposed Thursday raising the fiscal 2008 budget to ¥83.06 trillion in what may signal a retreat from the government's pursuit of fiscal reform.
The increase, the second in two years, is mainly being proposed to address ballooning social welfare costs in one of the world's fastest-aging nations, and to provide larger subsidies to local governments as pressure builds for the government to narrow the wealth gap between big cities and ailing rural areas.
The budget is the first proposed since Prime Minister Yasuo Fukuda succeeded Shinzo Abe in September. It would be 0.2 percent higher than the initial ¥82.91 trillion budget proposed for fiscal 2007.
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