As I see it, the Budget is crafted around four major themes.
This will not disturb market sentiment because the longer path to fiscal consolidation will come with an improvement in the quality of public expenditure away from consumption spending towards capital investment.
Direct budgetary spending on infrastructure will increase by Rs 70,000 crore. This spending, complemented with mechanisms such as the proposed National Infrastructure Fund, will catalyse additional off-budget spending on infrastructure to the tune of Rs 3 lakh crore over the next couple of years. This would represent a massive stimulus to domestic spending cumulatively equivalent to over 2 per cent of GDP.
For protection of the poor, the Budget takes up the battle to improve the effectiveness of subsidy delivery by connecting the Jan Dhan Yojana to Aadhar-based authentication and cash benefit transfers. This will be transformational for targeting subsidies to those who deserve them without wasting thousands of crores to thieving intermediaries.
Equally important, the Budget has sketched out the architecture for a universal social security system shifting the focus, inter alia, from consumption oriented support for the poor towards the development of a social safety net.
A roadmap for fundamental reform of the task system has been laid out. The Finance Minister has effectively committed himself to a major overhaul of the fragmented and complex system of indirect taxes by introducing the GST in FY17.
In parallel we see will a simplification of corporate direct taxes over the next four years that will reduce corporate taxes from 30 to 25 per cent in tandem with a progressive reduction in exemptions.
New legislation proposed for dispute resolution in public contracts, an omnibus law to for setting up new business, a new bankruptcy law, a path towards greater autonomy and improved governance for public sector banks, and a slew of measures in support of financial markets and venture capital should collectively have a big positive impact on private investment and its financing.
Mr Modi is serious about cooperative federalism. The states will not only get a greater share of divisible tax revenue, they will also get materially greater flexibility in how they spend these resources.
Central government's revenue spending allocated to Plan schemes have been partly substituted with transfers to the states. The Centre has left it to the states to decide how much they want to spend on these schemes.
This will mark the beginning of the end of the paternalistic centre. The bet is that decentralising decision-making will improve the effectiveness of government spending and help usher in a new era of constructive engagement between Centre and states especially on reforms on such as the GST that require collaboration across inter-state jurisdictions.
No serious commentator can dispute that this is a substantive Budget. It is neither "anti-poor", nor is it "pro-corporate". It is fundamentally and intelligently pro-development.
(The author is Executive Chairman, IDFC)