It also comes on the back of huge expectations. My impression is that the Finance Minister has delivered a Budget that is strong on vision, reflects clear intent to put the economy on the path of double digit growth, and has a strategy to execute challenging reforms in critical areas.
From a macroeconomic perspective, the government has done well to meet the fiscal deficit target of 4.1 per cent.
The softening of global crude oil and commodity prices has contributed to a significantly lower current account deficit.
Foreign Exchange reserves at $340 billion are at an all-time high. The government is committed to keep inflation at below 5 per cent. All these factors have given the Finance Minister a platform to lay out a roadmap of lowering fiscal deficit to 3.9 per cent in FY16, 3.5 per cent in FY17 and to 3 per cent in FY18.
The Budget clearly provides tremendous impetus to 'Make in India'. Increased investment in infrastructure of Rs 70,000 crore and a higher allocation of Rs 2,46,727 crore for defence will clearly provide a boost to domestic manufacturing and help in creating new employment opportunities.
Importantly, these investments would help revive the investment cycle and contribute to increasing the share of manufacturing in national GDP from 15 per cent to 25 per cent.
As a follow up, we now expect the government to expedite announcement of the new Defence Procurement Policy to facilitate larger private sector participation in defence production. The steps to facilitate "ease of doing business" will further support revival of growth in the domestic manufacturing industry.
Some of the key enablers to achieve manufacturing growth include roll-out of GST from April 1, 2016; announcement of five ultra-megar power projects - 4,000 MW each - which will give a boost to the capital goods industry; the initial Rs 1,200-crore allocation for the Delhi Mumbai Industrial Corridor with assurance for more funds later, significantly higher investments in the renewable energy sector, opening of opportunities for small and medium industries, emphasis on the housing sector and corporatisation of ports.
The roadmap to reduce the basic rate of corporate tax from 30 per cent to 25 per cent over the next four years, deferring the applicability of GAAR for two years and avoidance of retrospective taxation will considerably increase confidence of domestic and foreign investors.
The decision to abolish Wealth Tax and replace it with an additional 2 per cent surcharge on individuals with higher incomes is also welcome.
While the Finance Minister did speak about the need to push exports, I am slightly disappointed that Minimum Alternate Tax (MAT) and Dividend Distribution Tax on Special Economic Zones have not been withdrawn or at least lowered as was expected.
We hope the new Foreign Trade Policy to be announced next month will provide incentives for exporters.
This Budget has a vision to propel India to double-digit growth and make the country a manufacturing hub of the world. It is also an inclusive Budget that seeks to make a difference in the life of every Indian.
(The author is Chairman & MD, Bharat Forge)