A judicious approach has been adopted in the withdrawal of stimulus. While stressed sectors like handicrafts, SMEs and farming have continued to receive fiscal incentives through interest subventions and extension of loan repayment period, sectors performing well, especially organised manufacturing, have seen a partial restoration of excise duties.
Recognising the pressing issue of sustained high food inflation spilling over to generalised inflationary expectations, the Budget has initiated significant steps in the farm sector to reduce wastages, facilitate higher credit support and encourage investment in the food processing sector, along with the introduction of a climate resilient agri-strategy.
The fiscal arithmetic looks reasonable on a relatively low growth base of FY10. With buoyant economic activity, especially in the manufacturing sector, revenue receipts are projected to grow by 18.2%, with tax revenues expected to grow by 14.8%. Growth in total expenditure has been pegged at 8.5%. The disinvestment agenda has been re-activated on a stronger note and the proceeds from disinvestment have been scaled up to Rs 40,000 crore. One hopes that this remains a medium- to long-term initiative and not just a tool to bridge the fiscal gap! The Budget has managed to address a gamut of growth impediments. From structural supply-chain gaps in agriculture, funding constraints, to infrastructure, continuing thrust on rural development, to recapitalising public sector banksthere is something for everyone.
The author is chief economist, Yes Bank