India will change its budget spending in 2021 to accelerate economic recovery from the coronavirus pandemic.

The country is expected to open up its fiscal floodgates as part of Prime Minister Narendra Modi's efforts to revive the economy. For its fourth quarter this year, the government has relaxed restrictions imposed on its more than 80 departments that were aimed at saving cash.

The country is planning to increase its previously planned $409 billion pandemic relief budget, sources familiar with the matter said. The government will announce its spending in February, the sources said.

For 2020 India has reportedly not yet hit the halfway mark of spending seven months into the fiscal year - which started in April. Spending is expected to increase over final months.

India's cases and deaths from the coronavirus are second to the U.S. only. The country entered recession in the last quarter owing to lockdowns that halted business activity.

Modi's administration recently announced measures costing more than $400 billion - or around 15% of the country's gross domestic product - to bail out businesses and save jobs.

"More spending is actually required. And more the delay in extra spending (the) bigger will be the challenge," information technology company Societe Generale GSC said.

Economists said the government must be careful about spending given the shortfall of receipts from taxes and asset sales. The government will need to work with the central bank to mitigate risks, economists said.

India finance minister Nirmala Sitharaman said fiscal deficits shouldn't stop the government from spending because there is a "clear need" to spend to revitalize the economy.

India plans to offset the shortfall in tax and services collections by increasing its market borrowing. Sources said the government will borrow 13.1 trillion rupees -up from an initial 7.8 trillion rupees.