Not a 'big bang' Budget but overall tone positive: HSBC

NEW DELHI: There was no 'big bang' in the Budget but the overall positive tone should keep the country's feel-good factor going, global financial services major HSBC said in a report.

The government has stuck to its ambitious fiscal deficit targets and has given the right messages on manufacturing which should keep sentiment in the equity market buoyant, it said.

Presenting his maiden Budget, Finance Minister Arun Jaitley said the prevailing economic situation presents a great challenge and there was a need to introduce fiscal prudence that will lead to fiscal consolidation and discipline.

The government has retained the fiscal deficit target for 2014-15 at 4.1 per cent of GDP and reduce it further to three per cent by 2016-17.

"India's Budget offers a few reassuring steps and, faintly, a taste of the types of reforms that the government will need to deliver if eight per cent GDP growth is to be achieved in three years," HSBC said in a research note today.

"While there was no big bang, the overall tone was positive," it said, adding that the Budget marks a mere first step in a long and arduous road.

Meanwhile, Citigroup in a research note said, "We believe that FM Jaitley has played it safe, avoiding any politically contentious issues. However, the fact that he has displayed fiscal prudence more than market expectations should not be overlooked."

"Details (of Budget) appear promising where it ticks many boxes on reviving growth, focusing on infrastructure and increasing savings. A steady start, and a long run ahead," Citi's Chief India Economist Rohini Malkani said.

Though there were no major roll-back of subsidies, unlike the Budgets by the previous government, there has been no populist giveaways that could dent the state finances and undermine the private economy, experts said.

"From the Finance Minister's pronouncements, the government appears to want to push the economy in the right direction but the benefits of the policy measures introduced with this Budget are not quantifiable," HSBC said.

We think investors will give this government the benefit of doubt and in the months ahead judge it on its governance and its ability to lift/remove investment bottlenecks, HSBC added.