Budget will take growth to higher path: Japanese brokerage firm

Analysts at foreign brokerages have lauded Jaitley's maiden Budget saying it has ushered in the much-needed reforms

Analysts at foreign brokerages have lauded Finance Minster Arun Jaitley's maiden Budget saying the measures announced will boost growth as it has ushered in the much-needed reforms and has created a conducive investment climate.

Japanese brokerage Nomura president and chief executive Vikas Sharma, said this is a Budget that walks the fine line between the twin and somewhat contrasting objectives of higher growth and fiscal imperatives with great finesse.

"The Budget provides enough incentives and fillip to the private sector to start the investment cycle and take growth to a much higher path," he said.

Echoing similar views, British brokerage Barclays said, "This is the first major attempt by the Modi government to lay the groundwork for more reforms within the current fund- constrained environment".

RBS India's senior economist Gaurav Kapur also said the Budget aims at creating a more conducive environment for business and improving the long-term growth potential of the economy, without losing focus on fiscal consolidation.

"Given that there was limited space for fiscal support to the economy at large, the overall focus has been to provide a roadmap on the policy priorities of the government over the next five years, by introducing new schemes and initiatives and recasting some of the existing schemes," Kapur added.

He said by keeping the tax code unchanged, ruling out any more retrospective tax amendments in future and increasing efforts towards improving tax administration, the finance minister has aimed at providing much needed predictability on the taxation front.

The Budget has pegged FY'15 fiscal deficit at 4.1 % of GDP. The aim is to narrow this gap to 3.6 % in FY'16 and 3 % in FY'17.

An SBI research report said the fiscal deficit estimated at 4.1 % in FY'15 is an ambitious target and challenges remain in overhauling the current subsidy regime.

SBI further said allowing banks to issue long-term bonds without recourse to statutory pre-emption (CRR/SLR) for financing infrastructure is a positive step.

"The focus on infrastructure, will possibly led to a faster growth in productivity rather than consumption. This will help in a lower and stable inflation regime," the SBI report said.

BNP Paribas, however, believes that the Budget is not spectacular and more needs to be done. "But then the first Budget from a six-week-old government isn't expected to be. We believe the Budget lays a foundation for more to be done.