Budget 2015: A bid to cater to demands of all constituents, says Nirmal Jain

By Nirmal Jain

There are no big-bang reforms but there is enough in the Budget to propel the economy towards faster growth. It has raised outlay on plan capital expenditure by 34% for roads, railways and rural infrastructure. There is minimal increase in tax rates and yet the Budget aims to lower the fiscal deficit to 3.9% of GDP in FY16, with more realistic tax revenue targets.

Given the imperative to boost investment, the fiscal deficit target would be satisfactory to global rating agencies as well as RBI. Reduction in revenue deficit from 3.1% to 2.8% indicates qualitative improvement in the deficit as well.

India needs to sustain growth, create new jobs aggressively and, thus, support aam aadmi’s permanent uplift from poverty and dependence on subsidies. The sustained economic growth requires new investment to build infrastructure and capacity. Foreign investors would be pleased with deferment of GAAR by two years, merging of FIIs and FDI limits, resolution of domicile issue and removal of MAT.

There are several incentives to boost domestic savings and direct it towards financial instruments for productive use. More notably, there are steps to release money blocked in gold.

There are definite initiatives taken to boost investment in infrastructure including increased plan outlay, national investment and infrastructure fund, 20 GW of Ultra Mega Power Projects in the plug-and-play mode and tax-free bonds. With a target of 1 lakh km of new roads and housing for all by 2022, one can expect sustained buoyancy in these sectors. The Budget initiatives are complemented by action in coal, road, power, renewable energy, dedicated freight corridors, defence, railways and GST.

Commitment to simplify laws, ease administrative processes and move up on the parameters of ‘ease of doing business’ are not quantified by the markets but do benefit over long term.

Several measures that were stuck up for no good reasons, have been cleared. There is a pragmatic move towards lower corporate tax rates to be internationally competitive and providing more resources in the hands of state governments. The Digital India initiative with the trinity of Jan Dhan, Aadhaar and mobiles can bring about revolutionary changes over time.

If one has to list disappointments, there are a few, such as failure to provide a convincing solution to capital needs of public sector banks or direct boost to private sector for new capex. But on the whole, it is a great budget that attempts to meet demands of most constituencies quite effectively.

The aam aadmi directly benefits from several social schemes, additional concessions for pension and health insurance in the short term. In the long term, he will have a real big bonanza from faster growth, more jobs, better roads and fewer power cuts.