I was expecting a more pro-growth Budget. The Finance Minister seems to have focused on fiscal prudent. He has set target to contain fiscal deficit at 3.9 per cent of GDP (gross domestic product) against 4.1 per cent for this fiscal. He has pushed the target for containing the deficit at 3 per cent of GDP by one year to 2017-18. The measures expected to pump priming the economy with substantial investment was missing. The Centre has decided to transfer more funds to the State governments. The ability of the Centre to revive investment cycle is limited. We expect steel demand to go up with State governments investing ₹1.50 lakh crore and the Railways announcing a capital expenditure of ₹1 lakh crore for the next fiscal. However, one has to see, how much of the planned investment of the state governments and the Railways really take shape. In contrast to the industry expectations, the Government has hiked the peak customs duty to 15 per cent from 10 per cent, but left the effective rate unchanged. Interestingly, Korea and Japan can export steel to India duty-free, but Indian companies have to pay five per cent duty to imported met coke. It is a clear case of inverted duty structure, where the raw material is charged higher duty than the finished product. The Budget has left more money in the hands of the State governments, but we have to see how much of this translates to incremental investments. Overall, it is a wait-and-watch Budget.

As told to Suresh P Iyengar

Joint Managing Director and CFO, JSW Steel

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