Amitabh Chaudhry: Decent expenditure mix

The finance minister presented the Budget amid high expectations from almost every section of society. In light of the weak private sector capital expenditure, the government was expected to accelerate its own spending while maintaining the fiscal balance. After demonetisation, it was expected that the Budget would be fiscally expansionary in nature.  While there is some additional fiscal spending, with the target fiscal deficit for FY18 at 3.2 per cent, compared to 3 per cent stated earlier, we believe that the government has been fiscally prudent, which is good from a long-term perspective.
 
The mix of expenditure in the Budget is heartening; it is focused on the rural, farm and infrastructure sectors.  Also, there is a sharper focus on affordable housing.  The cut in taxes for small-scale enterprises will generate employment.  From a capital market perspective, capital gains tax on equity has not materialised and there is clarification on exemption of indirect tax on foreign portfolio investments. These are welcome steps. The steps proposed to clean up political funding are path-breaking.  We, however, believe more could have been done to encourage long-term financial investments.  Also, the government will have to deliver on its ambitious disinvestment target for FY18 in order to manage the fiscal deficit.

Amitabh Chaudhry
CEO and MD, HDFC Life