The Budget was one of the most anticipated in recent times. At the very least, there was an expectation of an articulation of a longer term vision that went beyond the presentation of the fiscal accounts. In that respect, the Budget could have been an occasion for more strongly outlining an agenda for disinvestment, fiscal consolidation and growth.

Nevertheless, I believe the Budget has taken several right steps. It has been realistic in its revenue projections by taking cognisance of the impact of the challenging economic situation on tax collections. Therefore, one would tend to have a fair degree of confidence in the projected fiscal deficit of 6.8%, which is broadly in line with the expectations of most market participants.

Interestingly, the increased deficit is projected to cause interest payments to rise to only 37% of the government’s revenue receipts, a far cry from the high of more than 53 % in 2001-02. From perspective of sustaining economic growth, Budget continues effort to boost private consumption, as a means of picking up the slack created by slowing private investment. Rural income growth has been given a push with a 44% increase in NREGA outlay, which is to reach Rs 391 billion.

Further, target for agri-credit, a key facilitator of rural income, has been increased by about 13% to Rs 3.25 trillion. The urban consumer is being encouraged to spend more, with abolition of surcharge on personal income tax and modest increase in tax exemption limits.Tthe budget has taken strong steps towards augmentation of infrastructure, given the government’s limitations in terms of revenues, as also in terms of avenues for channelling direct government spending in this area.