'Fiscal deficit at 3.3% is well intended'

Manish Sinha, MD, Dun & Bradstreet India.

Our headline response to the Union Budget is that the government stayed consistent with the growth agenda that was emphasized in their election manifesto. The Union budget was expected to provide a blueprint to make India a US$ 5 trillion economy. It has outlined some of the measures to achieve that. We see four themes in the Budget announcements: Structural reforms, Infrastructure development, Investment facilitation and ‘Ease of living’.

Structural reforms like strengthening the regulatory authority of RBI, faceless tax administration, rationalization of labour laws, promoting R&D, bringing companies having an annual turnover up to Rs 400cr within the 25% corporate tax benefit and the social stock exchange will provide foundational support to the economy.

Infrastructure spending of Rs 100 lakh crores in the next five years, connecting states through Bharatmala phase 2 and developing connectivity infrastructure will facilitate ease of doing business.

Measures to facilitate foreign investment through 100% FDI for insurance intermediaries, merging of the NRI-Portfolio Investment Scheme Route with the FPI Route and permitting investments made by FIIs/FPIs in debt securities will help in getting capital.

Ease of living measures like National Common Mobility Card, 8 crores free LPG connections and interoperability of PAN and Aadhaar are helpful initiatives.

Arun Singh, Chief Economist, Dun & Bradstreet India.

It is certainly an improvement from the interim budget with the objective to achieve US$ 5 trillion economy. By focusing broadly on infrastructure, affordable housing, recapitalizing PSU banks and supporting the NBFCs and agriculture sector, the government has shown intent to revitalize the economy. However, specific measures were expected to revive the Indian economy from the current slowdown. The expectation of restricting fiscal deficit at 3.3% compared to 3.4% is well intended with realistic revenue, ambitious non-tax tax revenue mobilization. However, borrowing in foreign currency can have implications if not well managed. The target for divestment in this fiscal is huge and should have careful monitoring of the execution, to avoid slippage of fiscal deficit target. The announcements towards education, skilling, and labour reforms need to be well-drafted, executed and timely implemented to get the intended benefit. On the flip side, the increase in excise duty for petrol and diesel has the potential to stoke inflation.