The fears of populist announcements ahead of the general elections next year have been allayed, through a pragmatic Budget which takes into account the tough economic environment we find ourselves in, both domestically and globally.
The commitment shown towards fiscal consolidation should go down well with the foreign investors and ratings agencies. This in turn will help pick-up in capital inflows which would gradually reduce the pressure on interest rates and the rupee. This should provide room for monetary easing - a 25 bp cut in rates would release Rs 17,000 crore in lower interest charges - an amount that exceeds the super rich surcharge!
There is continuity in the other key policy themes and elements as well, which is crucial for providing policy stability and a necessary condition for improving the investment climate. One of the most encouraging themes of the Budget is on gender equality and greater inclusion of women in the economic mainstream. In this context, the setting up of a women's bank is a novel idea. If the bank is designed around meeting the needs of women it could be a very successful and enabling institution. There is also a welcome focus on skill enhancement, which will be critical if we are to capitalise on our projected demographic dividend.
On the whole, the finance minister needs to be commended for remaining focused on fiscal consolidation in an election year.
Meera Sanyal
Country Executive, RBS India Ltd
Country Executive, RBS India Ltd
