While the broad macroeconomic indicators have been improving, the investment cycle is yet to pick up. It was imperative for the government to encourage investment. The Budget for FY16 attempts to do that.
The fiscal deficit target under FRBM (Fiscal Responsibility and Budget Management Act, 2003) has been delayed by a year, and the revenues that will be mobilised as a result will be spent on infrastructure.
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There is a clear intention to bring in some innovative steps to improve the ease of doing business. The proposal to progressively reduce corporate tax to 25 per cent in four years is a move to rationalise the corporate tax regime.
Other key positives are a proposal for a new bankruptcy law, plans to monetise gold holdings, a clear focus on black money and penalties therein, deferment of GAAR (General Anti-Avoidance Rule) and reiteration of the April 2016 deadline for GST (Goods and Services Tax).
Overall, the Budget numbers are credible and likely to be met. However, more could have been done to encourage domestic savings in financial assets, especially long-term saving instruments such as in insurance. Overall, the Budget promotes growth and is in sync with the current economic requirements.
CEO & MD, HDFC Life