Simplistically put, this is a sensible, political and realistic Budget. It is also a Budget that seeks the equity markets’ approval (so stays away from anything that could dampen the feel-good factor), and rightly so, gets it.
So why is it sensible? It is so because it builds on two unpretentious but robust Budgets, doesn’t add to the reform driven disruption the economy is in (GST, demonetisation) and focuses on multiple rather than a single sector or thematic drivers (agri, housing, digital, transportation). Its strength lies in the breadth of policy pushes, rather than a singular or overriding theme.
It is also a very political Budget—needed, given the aggressive risks taken with demonetisation, being mid-term in its current political cycle and a distinct slack in job creation. This Budget does play the political part well. There are income tax gains for the middle class, affordable housing, inclusion and MNREGA spends for the lower economic spectrum, and a great push for a wider tax base.
It is relatively real in its economic assumptions. In part, because there’s no other credible way —with recent demonetisation and GST disruption ahead, it’s hard to be aggressive with revenue projections. But it’s also because revenues have done well enough in the current year, have tail-wind, and importantly—the govern-ment is staying directionally on track with its fiscal consolidation agenda.
In some ways, this Budget is a little wary of antagonising, or risking the feel good around it. While it disapp-oints in not cutting taxes for corpor-ates—a key market expectation, it does not touch the relatively favour-able capital gains tax exemption that the equity market so cherishes.
– By Aditya Narain -Independent Market Strategist