The Finance Minister did a commendable job given the circumstances and expectations. The Minister tried to broadly achieve three things — be fiscally prudent, boost growth and build confidence.

Sticking to the original fiscal target of 4.1 per cent of GDP, which he could have easily increased given the circumstances, certainly displays the commitment. Given the risk of shortfall in tax collections, monsoon, Iraq situation, etc, the Minister’s commitment to the medium-term fiscal consolidation path will give huge comfort to investors, rating agencies and the markets.

However, it is in the area of boosting growth and reforms that the Budget scores the maximum. Long-awaited issues such as pass through structure for REITs (real estate investment trusts) and infrastructure funds, increase in FDI in critical sectors of insurance and Defence, tax incentives for boosting investments and supporting manufacturing by tweaking the duties — all are done with the aim of reviving growth.

In addition, easing the burden of regulatory pre-emptions (CRR, SLR) for banks that raise long-term funds for infrastructure sector clearly shows the high priority the government accords to this area. He has taken several measures to build confidence. These include Advance Ruling for resident tax payers, assurance of no retrospective changes in tax laws and initiatives to create a positive investment climate through various reforms. He has also left more money in the hands of the middle class by raising the tax slabs and investment limit under Section 80C to encourage long-term savings and increasing the deduction limits on housing loan interest to promote housing.

But as the Finance Minister put it, the steps announced in the Budget are only the beginning of a journey.

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