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Realistic moves, time to focus on sustained growth: Kaku Nakhate

Says the Budget lays foundation for the beginning of a journey towards a sustained growth of 7-8%

BS Reporter 

Kaku Nakhate

Difficult while the circumstances were, the minister has come out with a realistic and has shown he understands the big picture well - it deals with kick-starting the investment cycle, focusing on fiscal consolidation, attracting and institutional flows, promoting entrepreneurship across the length and breadth of the country and above all improving the business sentiment. It is high on social sector reforms and makes a pragmatic attempt to work closely with the states.

The lays the foundation for the beginning of a journey towards a sustained growth of 7-8 per cent. Our own research team expects growth to recover to 7.5 per cent levels in by 2018. There could be pressures on tax collection targets, in case of drought or on divestment targets, in case of tapering. The minister has kept the option of drawing down the government's surplus at RBI, if needed. The appointment of the Expenditure Management Commission would help the government to streamline its spending. Initiatives to step up the corporate bond market by extending withholding tax cut to all bonds and relaxation of SLR for to new infrastructure lending should help raise money to fund capex.

Kaku Nakhate
India head,
Bank of America-Merrill Lynch

First Published: Fri, July 11 2014. 00:13 IST