This may seem to be a Union Budget of many small steps, but a deeper evaluation does show the themes of urbanisation and infrastructure, job-creation and promotion of entrepreneurship, besides the increase in foreign direct investment in defence and insurance.
But, it appears to have given the domestic capital markets a miss. The gates have opened wider for long-term foreign money but India needs significantly more domestic wherewithal to achieve and sustain the stated objective of 7-9 per cent growth. The absence of domestic capital market enhancing measures is surprising considering the pervasive funding constraints in the economy and the social contract implicit in the recent voter mandate of providing faster economic growth.
This, even as the government is hoping to reduce fiscal deficit through growth than by cutting expenditure. The government expects to generate only Rs 63,000 crore this fiscal through divestments. So, how will the required raft of infrastructure investments be funded? I hope this imperative is addressed by encouraging safe financial innovation. To be fair, 45 days is too short a time for big-bang enablers from the government. But we will need them sooner than later.
Managing director and chief executive officer at CRISIL