'A clear focus on infrastructure and agriculture'

Sameer Sawhney CEO, Srei Infrastructure Finance Limited

The Finance Minister has offered a fine blueprint of several small steps to further accelerate India’s economic growth, while sticking to the government’s commitment of waging a war against black money.

The Budget has a pro-poor thrust and a clear focus on key sectors such as infrastructure, rural and agriculture, which can galvanise the economy through inclusive growth.

It carries an outlay of ₹3.96 lakh crore for infrastructure, an allocation of ₹48,000 crore for MGNREGA, a promise to double the income of farmers and a pledge to lift 10 million rural households out of poverty.

The magnitude of investment in sectors such as housing and transport will incentivise economic activities. The proposal to grant infrastructure status to affordable homes is a welcome move and will attract much needed investments in this space.

The phasing out of the Foreign Investment Promotion Board (FIPB) will further liberalise the FDI policy framework and send positive signals to foreign institutions exploring investment opportunities in India.

There is a clear emphasis on making taxes more efficient and reducing the complexities and opaqueness in the tax structure, though further pruning of income tax and corporate tax rates could have been considered to accelerate consumption and investment demand.

The government has attempted a fine balance between managing growth requirements and maintaining fiscal prudence. The fiscal deficit target at 3.2 per cent of the GDP for 2017-18 further reinforces the lower interest rate bias and creates a positive outlook on the economy. This will help the Reserve Bank of India to adopt a more accommodative monetary policy stance in coming months.

Overall, the Budget is structurally positive and augurs well for the Indian economy.

COMMENT NOW