Ajay Srinivasan, CEO, Financial Services, Aditya Birla Group. The Union Budget is characterised by a workman-like bottom-up approach, with a number of smaller details and steps, rather than relying on big bang announcements and reform. Administrative reform, improving the investment climate and sending clear messages on the long-term path we are on are clearly visible. The Finance Minister had the tough task of undertaking fiscal consolidation, initiating structural reforms, laying a supply-side framework for lowering inflation and restoring the financial savings rate and economic growth.

To a large extent, the Union Budget touched a number of the above areas. With FY15 fiscal deficit target at 4.1 per cent, the Finance Minister has assuaged concerns of both domestic and foreign investors and signalled the commitment to fiscal prudence.

More importantly, the Budget numbers look credible. While gross tax revenue growth of 17.7 per cent for FY15 sounds optimistic as compared to last year’s realised tax revenue growth of 11.8 per cent, the Finance Minister has been conservative in terms of the disinvestment target of ₹63,400 crore. Moreover, potential upside in tax revenue can be generated out of the ₹4 lakh crore of tax receivables under dispute or arbitration. Overall, the probability that Government will have to cut plan expenditure, a strategy used in the last two years, to meet fiscal deficit targets this year, appears quite low.

Expenditure growth is higher by ₹30,000 crore over the Vote on Account (VOA). This is funded by ₹31,000 crore of higher non-tax revenues. Overall, the deficit is higher by ₹3,000 crore over the VOA number of ₹5.28 lakh crore.

Overall, the Budget is a strong step on the path of credible fiscal consolidation with a number of steps which, if executed well, will clearly put us on the right track.

Related Topics
comment COMMENT NOW