While Pranabda’s budget is not a spectacularly reformist one, we should note that it does nothing to topple the economic apple cart. It is both balanced and growth oriented, although it falls short on some key dimensions. The positives were clearly the much-needed increase in public spending in the infrastructure sector and the FII limit to $25 billion. The fiscal deficit target for FY2011-12 has been ambitiously pegged down at 4.6 per cent, but only time will tell whether we are able to meet it. The FM has also given a boost to the industry by maintaining peak excise duty and reducing customs duty in selective industries.
The education outlay remains a mixed bag. The FM has increased the outlay 24 per cent to Rs 52,057 crore and more stress is being laid on vocational education, but there is no impetus specifically for higher education. For instance, education loans should have been brought under priority sector lending, making it easier for young talent to access better education.
Inflation is a major issue plaguing the economy. It is surprising to see that the Budget does not have a clear focus on curbing inflation in the short term. Overall, it is a Budget that maintains the status quo, but one that should continue to fuel India’s socio-economic growth juggernaut.
Indian School of Business, Hyderabad