By Madan Sabnavis, Chief Economist, Bank of Baroda on the Union Budget 

“The Union Budget has delivered good fiscal numbers while providing targeted incentives in critical areas. There has been steadfastness showed in terms of lowering the debt to GDP ratio and the fiscal deficit ratio will be marginally lower than last year at 4.3%. More importantly the gross and net borrowing programmes have been maintained almost at last year’s level which should assuage bond markets as bond yields should remain stable. This will also throw open the window to RBI to take a call on repo rate without having to worry about the borrowing programmes. 

A boost has been provided to capex with an outlay of Rs 12.2 lkh crore which is higher than Rs 11.1 lkh crore last year. This should help to being in private investment too especially in the infra space. The tax cuts of last year are still playing though the system and should encourage private investment in the consumer goods space. It may be hoped that with the overall policy thrust given in this budget, the flow of private investment will speed up. 

Given the external environment relating to tariffs being uncertain, the budget has laid specific emphasis on creating champions in MSMEs. Further to move towards self sufficiency in rare earths, there are specific allocations made here. Besides these allocations, the focus on education and health have also been emphasized. The government has also focussed on easing the tax payment processes which would be taken positively by the market.”