At the outset, this appears to be a modest Budget which attempts to recognise the need for consolidating the current financial status of the country and provide stability to the economy, with positive effect on some key sector but also presenting challenges to some.
It is heartening to see the finance minister has continued to keep the agriculture sector on the high priority list, with the total plan outlay increasing by 18% to R20,208 crore.
On the fertiliser side, the move to encourage self-sufficiency in urea production in five years and measures to encourage use of single super phosphate would be good for the sector. Greater outlay of funds to improve micro-irrigation will encourage the farmer to incorporate more efficient irrigation methods, even as increase in the agriculture credit from R4.75 lakh crore to R5.75 lakh crore would attempt to put more money into the farmers? hands, thus enhancing their quality of life.
Infrastructure has got a boost with a huge outlay for improving all-round infrastructure in the form of power, roads, ports, civil aviation. This will be vastly aided by the 100% higher mobilisation target for infrastructure bonds of R60,000 crore (from the earlier R30,000 crore).
On a general note, the re-capitalisation of PSU banks to the extent of R15,800 crore and greater access to ECBs at lower rates will infuse increased liquidity in the system, which would be very welcome.
Measures to curb import of unproductive assets like gold will also have a positive impact on foreign exchange outgo.
Increase in indirect taxes to the tune of approx R41,000 crore should take care of the revenue generation. However, this presents a challenge on containment of inflation and will need to be observed, because of the overall impact of increased service tax and excise duties. The cost increase is also likely to impact the growth of manufacturing sector. Against this, we will have to see whether the GDP growth target of 7.6% is achievable, based only on the back of growth in the services and agriculture sectors.
We will have to wait and see whether the fiscal deficit of 5.1% (down from revised estimate of 5.9%) can be achieved and whether the implementation of reforms such as GST and DTC this year will progress.
For the common man also there appears to be very little concession by way of direct taxes, taken in the context of increased inflation.
