FM deserves kudos for adopting cautious stance

The Budget has not disappointed the market, which is a departure from previous years. It has been presented against conflicting objectives such as the need to return to fiscal prudence, maintain growth momentum and reduce the government’s borrowing programme. Given these circumstances, Finance Minister Pranab Mukherjee deserves kudos for adopting a cautious, yet pragmatic stance.

In line with market expectations, the key positives include the commitment to rein in fiscal deficit to 5.5 per cent of GDP in FY11, and thereafter to 4.8 per cent and 4.1 per cent in the subsequent years. The government borrowing programme at Rs 3,45,000 crore is lower than market expectations. This is reassuring as it will not put undue pressure on interest rates nor crowd out private sector borrowings.