Keeping deficit under check without imposing additional taxes and staying away from populist largesse are positive aspects of the budget. The budget has taken incremental measures to boost investment in housing, infrastructure and the social sectors.
Firm targets on roll out of GST, DTC, issuance of new bank licenses and move towards cash subsidies are encouraging. A quantum increase in the limit for FII investments in infrastructure bonds and allowing foreign investors to invest in domestic mutual funds are bold moves towards liberalizing the capital account.
Fiscal deficit at 4.6 prer cent of GDP and net market borrowings for the next year are better than what was expected and will sooth fears of crowding out investments or sharp spikes in interest rates.
Measures on taxation and spending in key programmes would keep the consumption story intact while some visible moves have been made to push infrastructure build up. Long ranging reforms like roll out of GST, direct tax code, financial sector reforms, subsidy reforms with better targeting through Unique identification Number will all assist in increasing the growth potential of Indian economy. The markets will now focus on cues from global markets and incremental economic data and corporate earnings.