Chief Economic Advisor, State Bank of India

The FY15 Budget has made a bold attempt to reignite growth through a bottoms-up approach. The Budget has something in it for everybody, with primary emphasis on ‘ bijli, sadak, paani , makan and souchalay’ . There are also tax concessions for the aam aadmi and for women. The thrust of the Budget is on investment in agriculture and manufacturing. For development of rural infrastructure, the RIDF corpus has been increased to ₹25,000 crore. Also, the Warehouse Infrastructure Fund and Long Term Rural Credit Fund with ₹5,000 crore allocation have been created.

This augurs well for declining long term investment in agriculture. The MSME sector, which provides employment opportunities to 60 million persons and contributes to 45 per cent of India’s manufacturing output, has also been allocated ₹10,000 crore.

The Budget has proposed a number of initiatives for the banking sector. The provision to allow banks to issue long term bonds without the precondition of CRR/SLR is a big positive for the infrastructure sector and will alleviate the asset-liability mismatches on banks’ books. Bank consolidation is also a welcome move. Setting up of six more DRTs (Debts Recovery Tribunals) will provide a thrust to the recovery mechanism of banks. Also, the move to increase the limits on section 80C from ₹1 lakh to ₹1.5 lakh will also provide a boost to financial savings. It may be noted that the households contribute to 75 per cent of total savings

On the whole, even though the receipt targets in the Budget look ambitious, this Budget is the perfect foil to reignite domestic growth.

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