Budget attempts to cover the divots

This budget needed to repair the economy. Building on sentiment lift moods, bring in relief for the middle classes and give hope to the industry.

In a sense, the budget was really the one tool for the economy to cover its divots. And it somewhat did. It picked incremental changes and improvements over a complete overhaul of the system. There was no doubt something was in there for everyone. The finance minister offered goals of sharply cutting government debt, bringing down inflation, splurging on infrastructure and creating jobs.

Expanding the cap on foreign holdings in Indian defense and insurance companies is a signal to the foreign and domestic investor that the government understands industry needs and will create a more conducive climate for new investments. Not rolling back retrospective taxation may have been read into as a setback but there was no indication on increasing such liabilities on corporations.

The focus on infrastructure was positive although it's not clear that changes will start kicking in soon. Roads, rail, ports, gas pipelines and waterways are all expected to get a resurrection and in process will shake up the need from allied sectors like oil and gas, cement and construction.

Industrialist Harsh Pati Singhania called this a 'balanced and developmental budget' whileCiti termed this a five-year run in its post budget report. For the masses, there were enough tax positives as the government raised the caps for taxable income. The middle class voted Modi in and they were in for a pleasure surprise with the exception of a higher long term tax on mutual funds.

It's hard to say how and how soon the government would be able to shore up revenues but an effort towards containing fiscal deficit by FY17 went down well for those who gave the budget a fine print check.

This wasn't a dream budget. It didn't promise a hole-in-one but a steady iron game. It stayed the middle of the course and that has meant no abrupt changes or sudden moves for a government that's new to its business.

There were expectations that in the light of the strongest election mandate in a few decades, the Modi government would push for drastic reforms but for now it appears it wants to play it safe and steady. Perhaps its time to note that budgets must remain more of an exercise to repair divots.

Pulling out the driver – or displaying all cards for reforms at one go– may jeopardise the shots. What India needs is a firm platform for economic change, decisive leadership with execution capabilities.


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