Budget 2018's focus on pump-priming the economy should calm investor nerves

The immediate adverse impact of LTCG tax would be contained due to the grandfathering clause

The Union Budget has focussed on pump-priming the economy at the cost of some fiscal discipline in the short term. However, albeit at a slower pace than earlier projected, it commits to glide path of the lower fiscal deficit in the medium term. While the fiscal deficit target of 3.3% of GDP for FY19 is higher than expectations, the budget also talks of limiting it to 3% by FY21. The budget also talked about limiting Central Government Debt to GDP to 40% over the medium term. These intentions should calm the nerves of rating agencies and investors reasonably well.