Jaitley added the fiscal deficit would narrow to 3.6 percent of GDP by fiscal 2015/16 and to 3 percent by 2016/17.
Below are analyst comments on the budget.
RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI:
"Contrary to almost everybody's expectations, the government intends to meet the fiscal deficit to GDP target of 4.1 percent in FY15 despite two years of very low growth, huge subsidy arrears and lingering threats of monsoon failure and oil price shock. It shows the government's firm commitment to support the RBI in inflation control and management. However, the underlying dynamics of growth-inflation trade-off suggests that we may not see much elevation in growth during FY15. This message was also loud and clear in yesterday's Economic Survey that has suggested a period of at least two years before the nation attains a growth trajectory of 7.0 percent plus."
R. SIVAKUMAR, HEAD OF FIXED INCOME, AXIS ASSET MANAGEMENT, MUMBAI
"Commitment to the 4.1 percent fiscal deficit target as well as the aim to bring it down to 3 percent in two years is hugely positive for bond markets. They have also announced a few important structural reforms including FDI liberalization in defence and insurance and some amount of manufacturing relaxation, tax benefits for REITs and commitment to no retrospective taxation going forward. I think these are very very significant steps from a larger macro as well as structural perspective."
RADHIKA RAO, ECONOMIST, DBS, SINGAPORE
"The initial trickle of proposals under the FY15 budget accords priority to fiscal prudence and a wide-ranging developmental agenda laid down by the new government. Achieving this year's deficit target might prove to be a challenge if the bullish revenue projections from the interim budget are maintained as well.
Higher FDI limits are encouraging, but will require an overhaul on the infrastructure and the regulatory framework. Specifics of the game plan laid out in today's budget will be important to support the markets."
NIRAKAR PRADHAN, CHIEF INVESTMENT OFFICER, FUTURE GENERALI INDIA LIFE INSURANCE, MUMBAI
"I think everything is better than expectations. FDI in defence and insurance have come which shows government is focussed on restarting the investment cycle. Fiscal deficit target at 4.1 percent is also a positive surprise. The finance minister has a comprehensive package for all the issues and economic challenges that India is facing. I will look at increasing exposure to shares now. Equity is falling just on event-based profit-taking but will catch up in the near term."
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
"Fiscal consolidation is a strong takeaway. The FDI in insurance and defence and the plethora of schemes for improving the rural economy with all round focus on development programmes, are a key thrust. It's a good beginning.
For the 4.1 percent target of the fiscal deficit, the heavy lifting may be done by PSU disinvestment and non-tax revenue streams."
SHAKTI SATAPATHY, FIXED INCOME STRATEGIST, AK CAPITAL
"It seems to be a neutral budget with positive light on key economic variables to tackle the current stagflation. Though targeting the earlier fiscal deficit of 4.1 percent is a surprise favour to the market, the conviction of fiscal management in revenue and expenditure sides is being awaited."