An understated Budget

COMMENT: V Vaidyanathan MD & CEO, ICICI Prudential Life Insurance

In some ways, this is an understated Budget — it delivers more than it apparently does. Nine per cent growth is a big theme, but somehow the markets got lost into details and didn’t read this bold picture.

All policy initiatives, whether FDI, FII or divestments, will align with it — these will unfold in the days to come.

One significant theme the minister has so well-explained is that growth sets the stage for social schemes, as it generates resources and taxes for these programmes. It is true, a decade ago India could not have imagined rolling out NREGA; today we can.

NREGA investment is up 44 per cent to Rs 39,000 crore and with accelerated growth and ID schemes, this has scope to grow. All pro-poor talk needs to capture this theme, and this message is sinking into our polity now.

On taxes, the simplicity of the approach is endearing. The FM has talked of stable tax rates, which are simple to administer.

Though the market started coming off after the corporate tax rate announcements, there was actually little hope for cuts this year, considering the fiscal situation. In fact, to leave taxes untouched and yet provide so much for social welfare is a big achievement. It’s pragmatic and reasonable.

Many observers may have expressed discomfort on the high fiscal deficit. Fiscal stimuli on Customs and excise continue, despite the fiscal situation. But this is actually a great decision, as growth will bring in taxes to address the fiscal deficit.