To begin with, not being inflicted by fresh taxes or levies is a huge relief for the industry. On the other hand, continuing the tradition of deferring the introduction of finance reforms like GST and DTC has not surprised any. Shorn of these two, the Budget has done a passable job of balancing revenue and expenditure demands.
The commitment to invest $1 trillion on infrastructure in the 12th FYP between the government and private partners continues to reinforce the need for quality infrastructure in India, and the opportunity to create investment and growth while addressing this need. The allocation for agricultural credit has been increased by 22% to `7,00,000 crore. The development of urban infrastructure through the JNNURM scheme has also been hiked by 40%.
Companies have been encouraged to invest in creating fresh assets through the investment allowance benefit. Several industrial corridors are currently at the planning stage.
On the face of it, these seem to reflect bold measures designed to reinforce the commitment to pursuing the key priorities defined. But what do these mean to the average Indian? Inflation has been close to 10% for most of the last year. Food inflation, driven by supply constraints and delayed monsoons, has been higher. Disposable incomes of the urban middle classes have declined.
Gross domestic savings rate have also declined. Indian economic growth has been tantalisingly close to 5%. Corporate growth has slowed and is in the midst of uncertainty. Companies have held back their expansion plans.
This crisis of confidence is reflected in consumer sentiment and this has not been addressed in the Budget.
Beset with supply-side constraints, we cannot foresee inflation levels which will give the RBI the confidence to cut rates. Overall, the noteworthy aspect has been the prudence displayed by the FM.
The writer is president & chief executive, Lifestyle Division of Reliance Retail