The Budget is commendable, as without making any major tax changes it has targeted a 4.6-per cent fiscal deficit for 2011-12 by focusing on achieving 9 per cent growth.
The net borrowing target of Rs343,000 crores, lower than what the market expected, will help in moderating the pressure on interest rates, which is good for the industry and the equity market.
By not increasing the excise duty the finance minister has ensured the current growth trajectory is not disturbed and that collection targets are met from higher volumes. The cash based transfer mechanism for subsidies is a very positive step.
Increasing the limit of FII investment in corporate bonds and Infrastructure bonds are steps in the right direction to improve liquidity in the market and make funds available to the corporate sector.
Allowing the Indian equity mutual funds to source funds from foreign investors is good for the growth of the Indian Mutual Fund industry and will also result in higher flow of foreign funds into equity markets over a period of time.
Stand alone while the budget is positive for the equity markets, other factors like the crude oil price and the global scenario will largely decide the direction of the market in the medium term.''