It is a prudent growth-oriented Budget with a special focus on healthcare, education, livelihood and infrastructure. I think the political compulsions made the finance minister to play safe. Economy calls for austerity and politics demands profligacy. In a nut shell, the Budget establishes a fine balance between populism and reforms.
To project India as a favourable investment destination, it was clear that fiscal correction and ways to boost foreign investment would be high on his agenda and this was reflected in the Budget speech.
The Union Budget seems realistic, credible and is a sincere attempt towards achieving fiscal consolidation with heavy emphasis on the infrastructure sector. Containing the fiscal deficit at 5.2% is commendable and a projection of 4.8% deficit for FY14 seems achievable. The subsidies in petroleum sector are gradually diminishing, food and fertiliser subsidy too are at a reasonable level.
The capital-intensive manufacturing and infrastructure will get a push on account of introduction of 15% investment allowance, the validity being till 2015, it removes uncertainty associated with next year?s Budget. It also focuses on steps that will facilitate corporates to access funds through tax-free infrastructure bonds for which the limit has been revised to R50,000 crore.
The PPP model for improving domestic coal production, developing ports on the eastern coast of country and tender for 3,000 km of roads in the next six months indicates a clear push towards propelling infrastructure development in sectors like roads, ports, coal mining and power.
The upward revision of import duty from 1% to over 4% on steam coal imports will adversely affect the industry as it will lead to an increase in cost of power generation.
Steps towards implementation of GST will help trade. It will make taxes uniform and can also help cut prices. The Budget has made provision of R9,000 crore towards this, which indicate clear intent for implementation. Overall, this Budget can be termed moderately populist as the finance minister has tried to address majority of the issues faced by the common man and it has also shown the softer side of the UPA by announcing gender-sensitive schemes, especially for women.