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This year’s fiscal deficit target of 4.1 per cent will be met. We also have the roadmap for bringing this figure down to 3 per cent despite pushing the time frame by a year. This is not a big slippage especially when we need to see the Government lead the investment cycle and prime the economy. The additional ₹70,000 crore worth investments in the infrastructure sector should help boost growth and crowd in private investments in due course. Higher growth will bring in greater revenues. Likewise, we have seen the finance minister commit to extending the Direct Cash Transfer scheme to rationalise subsidy payments.
On food inflation, one key announcement has been the setting up of a unified national agriculture market. This is a long-standing demand of industry, and when achieved, should help ease the inflationary pressure in case of food items. The Government has also accepted the RBI’s recommendation of having a Monetary Policy Committee and this should reinforce the partnership between the Government and the Central bank in managing the inflation dynamics.
Given the weak consumption demand in the economy, we were expecting that the finance minister would leave more money in the hands of the consumers. While there has been no direct measure towards this, steps taken to propel infrastructure and manufacturing will support job creation and this in turn would provide some stimulus to demand in the economy.
Black money Several steps have been presented to prevent black money, including proposed incentives for use of plastic money over cash and enactment of comprehensive new laws on black money stashed abroad and domestic benami (fraudulent) transactions. Due care would be needed while drafting laws to ensure that a new set of problems do not get created, as observed in the past in the case of the FERA (Foreign Exchange Regulation Act) regime.
Deep structural reforms are needed to steer the economy towards higher growth path and these cannot happen overnight. However, this budget has set a clear direction in which the economy is to be steered and has also laid down the milestones that we need to cross on the way.
The writer is Immediate Past President of FICCI
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