 "Soumya Kanti Ghosh")
The Budget has provided a pleasant surprise to the market with the finance minister deciding to take the bull by the horn by sticking to the fiscal deficit target at 3.5 per cent. Additionally, the government borrowing number at Rs 6 lakh crore will ensure that bond yields stay favourable and provide the much needed succour to banks. However, bank recapitalisation numbers could be an ongoing exercise as at the current adequacy level such numbers may have to be scaled up significantly.
Overall, this Budget has a clear agenda of reforming the agricultural sector through measures that could enhance productivity. This was long overdue as average yield of most crops in India is lower than the world average yield and comparable developing countries.
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There are special incentives for the MSME sector in the Budget like incentivising the small businessmen. Such measures will act as an enabler on ease of doing business. Additionally, we expect that the MUDRA scheme with a scaled up disbursement target at Rs 1, 80,000 crore in FY17 on a conservative basis could provide employment to around 35 million individuals.
Soumya Kanti Ghosh
Chief Economic Advisor, State Bank of India
