Better than expected: Deepak Parekh

With a growth rate of 6.9 per cent, the economic performance in fiscal 2004-05 has surpassed expectations.

The reasons: a significant rise in industrial production, higher exports, buoyancy in investments, a reined in inflation rate and a stable external sector.

The Budget is a tight-rope-walk act in meeting the objectives of the Common Minimum Programme, the demands of the coalition parties as well as adhering to the requirements of the fiscal and the Budget Management Act and the 12 th Finance Commission.

One of the negative features of the Budget is the levy of service tax on construction of residential complexes. This when passed on to home-buyers will result in increased cost of properties. However it's a well-balanced budget.

The finance minister has reiterated the importance of creating a more liberal FDI regime. As regards the financial sector, there have been some salutary measures.

The proposed inclusion of securitised debt and mortgage-backed securities under the SCRA will widen the investor base and enhance liquidity for such instruments.

The derivatives market will also see deepening, with derivatives no longer construed as 'speculative transactions'. FIIs will also now participate in the derivatives market.

Given the average Indian's inclination to invest in gold, permitting mutual funds to offer gold traded exchange funds is a welcome measure. The proposed removal of the statutory limits on CRR and SLR will provide RBI with greater freedom on monetary policy.

After a long-winding debate, there has finally been a consensus of using a part of the foreign exchange reserves for infrastructure development through the special purpose vehicle route.