The key challenge for Budget 2015-16 was to re-invigorate investment in infrastructure and other sectors given the fiscal constraints faced by Government of India (GoI). The Budget has enhanced outlays for capital spending and earmarked a higher amount of duty being levied on petrol and diesel as road cess.

Moreover, rational allocation of risks to fix the Public Private Partnership (PPP) model and proposal to auction projects in the power and other infrastructure sectors subsequent to all clearances and linkages being put in place would help boost investment sentiment. Other positives include the setting up of the National Investment and Infrastructure Fund, tax free infrastructure bonds for rail, road and irrigation sectors, rationalisation of capital gains at the time of listing of REITs and InvITs and proposals to monetise gold savings.

In addition, correction of the inverted duty structure for some sectors, bankruptcy law reform and enhanced focus on skill development are likely to boost the 'Make-In-India' programme. In particular, the creation of the Micro Units Development Refinance Agency Bank and Electronic Trade Receivables Discounting System is set to improve access to credit for small and medium industries. However, the subdued outlay for recapitalisation of public sector banks is disappointing. But the roadmap for rationalisation of Corporate taxes looks positive.

Furthermore, the increase in the proportion of shareable union taxes to be devolved to the State Governments to 42 per cent from 2015-16 onwards from the prevailing 32 per cent, would afford the States greater autonomy and flexibility to plan expenditures based on their own priorities.

In our view, the outlay for food subsidy may need to be enhanced above the budgeted allocation of Rs. 1.24 lakh crore for 2015-16, if the existing entitlements under the National Food Security Act are rolled out on a pan-India basis on April 1, 2015. In addition, the carried forward backlog of subsidy and considerable delays in payments in 2014-15 suggest that the allocation of Rs. 73,000 crore for fertiliser subsidy may be inadequate.

The writer is CEO, Group ICRA