However, Mukherjee continues to show commitment to reforms.
Indians counting on a budget rich in new opportunities were sorely disappointed, although those in corporate India may come off happy – things might not be any better, but they haven’t gotten any worse.
In an interview with CNBC-TV18’s:
Q: Do you believe that the math on this budget adds up because I think ultimately that’s going to be the test of the effectiveness of everything he did or did not announced today?
Kochhar: I think it will work out. You are right that it’s a very bold assessment of saying how we want to take our fiscal deficit and improve it over the next three years. But I think the same feeling was there last year, when the Finance Minister announced that we are going to improve the fiscal deficit going forward. Not only has the one year’s plan been achieved, it’s actually been achieved in better manner than what was expected last year. So, I am actually very confident that the plan that has been rolled out will be achieved.
Q: Should I be disappointed that there was absolutely no boldness in vision in this budget or should I be happy that there was no negative surprise as well?
Mariwala: You are absolutely right, there is nothing negative in terms of certain fears we had, whether it is increase in service tax or excise duty. But there is no big ticket reform agenda which is structural and which will take the economy to a different path. I thought this was the right time because the government has two years to complete the term. India’s stock markets have not done well, there is overall confidence issue about the Indian economy. So, I thought the time was right to take some big ticket reform agenda which has not happened.
While the budget does balance multiple objectives; nearly half the proposed plan expenditure for 2011-12 focuses on the infrastructure sector – at Rs2.14 lakh crore, it represents a 23 percent growth over the current years.
The budget also announced capacity-building efforts to enable public-private partnerships, an important model to facilitate infrastructure investments.
According to the Daily News and Analysis India:
The infrastructure sector’s five-fold rise in the FII participation limit for infrastructure companies’ bonds (to $25 billion), and a proposed reduction in the withholding tax to 5 percent (from 20 percent) for notified infra-debt funds are expected to attract much needed foreign investment.
In the finance sector, the government has committed additional capital to public sector banks (Rs6,000 crore this year, in addition to Rs20,157 crore in 2010-11).
Housing finance is expected to benefit from the increased limit for priority-sector eligibility and the proposed central electronic registry for houses — this should limit the incidence of fraud and multiple lending.
Agriculture and enabling infrastructure attracted welcome attention. Interest grants on agriculture loans increased by one percentage point. Cold storage projects and investment in new fertilizer projects in effort to enhance crop productivity and realizing supply bottlenecks in agriculture will be aided alongside Nabard’s increase in capital base.