The finance minister has been ambidextrous in addressing the development issues in a comprehensive manner while keeping fiscal deficit under control. This Budget has absolute clarity in all-round infrastructure development of the country.
Therefore, agriculture, health, education and almost all infrastructure areas have been addressed. Extending infrastructure status to cold storage chains, augmentation of storage capacity through private sector participation and making capital investment in storage capacity eligible for viability gap funding are big steps forward.
This, along with the increased allocations for the various sub-programmes under Bharat Nirmaan, will boost development of rural infrastructure and lead to long-term solutions in the supply-chain management of agricultural produce.
On the infrastructure front, the move to raise FII investment limit in corporate bonds is a positive step. Also, allowing FIIs to invest in unlisted bonds with a minimum lock-in period of three years and the provision to trade such bonds among themselves within that three-year period will help attract the much-needed risk capital needed for this sector.
The extension of individual investment in infrastructure bonds up to a maximum of R20,000 to mobilise household savings into infrastructure has been extended by a year.
However, this cap should have been increased. The tax incentives extended to attract foreign funds for infrastructure financing is another positive step.
A 23% jump in allocation for infrastructure is, indeed, a welcome step. The announcement of the infrastructure debt fund and the reduction of withholding tax from 20% to 5% will encourage substantial investments from overseas investors.
In the financial sector also, investments by foreign investors in mutual fund houses will help in giving the much-needed boost to the sector.
Aiming to restrict the fiscal deficit to 4.6% of GDP is commendable. What is more praiseworthy is moving away from the issuance of oil bonds and relying on direct transfer of cash subsidy on kerosene, fertilisers, etc, so that there is no misunderstanding on the fiscal deficit figure.