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At the outset, this appears to be a modest budget which attempts to recognise the need for consolidating the current financial status of the country and provide stability to the economy.
There are some welcome moves:
Agriculture sector
There is a continued focus on agriculture, which can be seen from the following measures:
The total plan outlay has increased to Rs 20,208 crore, a raise of 18 per cent.
Moves to encourage self-sufficiency in urea production within India in 5 years.
Measures to encourage use of single super phosphate.
Greater outlay of funds to improve micro-irrigation.
There is an attempt to put more money into the farmers' hands, by means of increasing the agriculture credit from Rs 4.75 lakh crore to Rs 5.75 lakh crore.
Infrastructure
There is a focus on improving all-round infrastructure in the form of power, roads, ports, civil aviation etc with a huge outlay. This is being funded through higher mobilisation through Infrastructure bonds of Rs 60,000 crore (from the earlier Rs 30,000 crore)
Increased liquidity in the system.
Re-capitalisation of PSU banks to the extent of Rs 15,800 crore and greater access to ECBs at lower rates.
Revenue generation to the exchequer.
The requirement of large funds for implementing the above initiatives will be addressed through significant increase in indirect taxes of approximately Rs 41,000 crore
Measures to curb import of unproductive assets such as gold will have a positive impact. However, there are some areas to wait and watch. Containment of inflation will need to be observed, because of the overall impact of increased service tax and excise duties on total costs. The growth of manufacturing sector looks difficult because of these increased costs. We will have to see whether the GDP growth target of 7.6 per cent is achievable. It will then have to be supported by growth in agriculture and service sector. We will have to wait and see whether the fiscal deficit of 5.1 per cent (down from revised estimate of 5.9 per cent) can be achieved and the Government's progress in implementation of reforms such as GST and DTC.
(The author is Chairman, Murugappa Group.)
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