Budget strikes a balance between fiscal consolidation & capex

 The Union Budget has truly managed to strike a fine balance between fiscal consolidation and public spending to spruce growth, against the backdrop of challenging global and domestic environment. Rana Kapoor (more) MD & CEO, Yes Bank | Rana Kapoor CEO, Yes Bank The Union Budget has truly managed to strike a fine balance between fiscal consolidation and public spending to spruce growth, against the backdrop of challenging global and domestic environment. The way the Budget has been presented has undergone massive changes in the form of removal of plan and non-plan distinction, amalgamation of the rail-budget with the Union Budget, and review of existing FRBM targets.

 Despite challenging global circumstances, the Finance Minister has managed to tread on the path of fiscal consolidation, budgeting for 3.2 percent of GDP in FY18. At the same time, he has reduced tax liabilities for 96 percent of India’s MSMEs, granted infrastructure status to affordable housing and allocated ample funds for rural upliftment, which will act as fiscal multipliers. Most importantly, this year’s Budget has brought the focus back on capex – with much-needed focus on roads, railways and highways. The Government has budgeted for a 10.7 percent increase in capex.

 Other than this, the Government has also attempted to create an eco-system that will make India a global hub for electronics manufacturing and planning for export infrastructure through the TIES Scheme and setting up Strategic Crude Oil Reserves. The total allocation for infrastructure development is at a record INR 3.96 Trillion. Power and Renewable Energy: In addition to the proposed merger of all PSU oil companies to create a USD 100 billion behemoth, the Finance Minister has also announced duty reduction in LNG and creation of additional strategic reserves which will ensure adequate availability of energy to fuel India’s growing manufacturing sector.

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