FM has taken care of all his constituencies: Rajiv Kumar

Says the FM has given some relief to aam aadmi by raising the income tax exemption limits by Rs 50,000

The Finance Minister had the tough task of balancing fiscal consolidation, boosting growth and taking care of the aam aadmi's welfare. He seems to have pulled it off, but by taking the bold gamble of sticking with the almost impossible fiscal deficit target of 4.1 per cent for 2014-15. He is relying hugely on a growth acceleration to achieve this.

All his revenue assumptions are critically dependent on a real GDP growth of 6 per cent or higher. He would be very lucky to get this. But he has tried to promote growth by increasing the plan expenditure by 27 per cent over 2103-14; liberalising the FDI regime in defence, insurance and urban housing; extending the investment allowance for investments above Rs 25 crore; and making substantial allocations for infrastructure development and extending tax holiday for the power sector.

For the aam aadmi, he has given some relief by raising the income tax exemption limits by Rs 50,000 and increasing the cap on financial savings and housing loans. So, he has been successful in taking care of the interests of all his constituencies. We need to wish him luck so that downside risks to growth do not come up.

Rajiv Kumar
Senior fellow with Centre for Policy Research