The Finance Minister has committed to adhere to the fiscal roadmap and contain the fiscal deficit to 3.5% in FY 2016-17 despite considerable pressures on the government finances due to the implementation of the 7th pay commission recommendations. He has done a fine balancing act by delivering a fiscally prudent and growth oriented budget.
The Budget attempts to kickstart the investment cycle through robust public capex spend even as it places equal emphasis on crucial areas such as agriculture & farmer welfare, rural development, healthcare and skill development in an effort to address rural distress after two successive subpar monsoons
The government has continued to increase investment in the key areas of the infrastructure sector such as roads and railways, provide incentives for oil and gas discovery in deep water, allow 100% FDI in marketing of food products produced in India as well as create a robust dispute resolution mechanism for Public Private partnerships in the infrastructure space.
The FM has announced a series of initiatives aimed at increasing tax collections, streamlining tax administration as well as creating a framework to facilitate resolution of long pending tax disputes.
The bond markets have been enthused by the adherence to the fiscal deficit as the net government borrowing for the fiscal 2016-17 stood at Rs 4.25 lakh crore, lower than market expectation while the equity markets took comfort from the status quo on long term capital gains.
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