In line with our expectations, the Budget has come out with a clear long term vision that will help Indian economy to recover and achieve its potential growth rate.

Given the fiscal constraints and lower tax to GDP ratio, we expected the Budget to be well balanced in terms of managing expenditure and revenues. It is a Budget that aims to ramp up growth, aided by a slowed pace of fiscal deficit cuts and a bundle of tax measures to put private domestic and foreign capital to work.

The budget has increased allocations towards infrastructure spending to kick start capex and have subsequently revised fiscal deficit targets that would be achieved over the next three years. The revenue target forecast for next fiscal appears realistic and seems achievable, this is a big positive takeaway from this Budget.

A few announcements like implementation of GST, achieving double digit growth rate, allocating more resources to States, monetising gold, deferment of GAAR and curbing black money transactions are extremely helpful in achieving sustainable long term economic growth. The direction of the Budget is right and the vision is clear.

A proposal to amend RBI Act to announce a Monetary Policy Committee (MPC) and an agreed monetary policy framework also bodes well for the fixed income market.

We continue to believe that equities, albeit reasonably valued, offers a good medium to long term investment opportunity. Investors are recommended to invest in equities with 3 to 5 year view.  On fixed income side, we believe that there is enough scope for interest rates to come down and it remains an attractive investment opportunity in the short to medium term period.

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