This budget didn’t have the fanfare as much as the last one did, but getting this one right was very necessary amidst the credibility issues for the government.
Some experts are not very happy about the reforms not being announced, and not much commitment being shown towards passage of GST bill, some aren’t very happy with 60% of EPF being made taxable. Some are very happy with the extra stimulus (84%) towards agriculture.
Sure, the devil lies in the details, and I am no expert. But I like the budget in principle.
I like the commitment being shown towards fiscal discipline with fiscal deficit target of 3.5% which may not have been easy choice to make.
With world economy in tatters, the temptation for extra fiscal stimulus to boost the demand was easy to fall for, despite that, government has struck to the principles laid out in FRBM Act.
To achieve the target is extremely difficult especially because the budget doesn’t seem to have withdrawn fiscal support from any sector in the economy. That seems like a gamble, depending on the oil prices to remain lower for another year. By some predictions, which could well be true.
Another way, the government may look to achieve the target is through the asset sales, disinvestment and privatization, which if employed is very much welcome, because we haven’t met the divestment targets from a long time. And many of the public sector companies have become a burden. Plus we have seen how rewarding the auction of assets have been if done with transparency.
Having struck to fiscal prudence, also calls for a rate cut or probably multiple rate cuts over a 6 month time by RBI, and government seems to trust the households to spend savings, take loans liberally to boost demand in the economy.