This is a careful, incremental budget, and those looking for the immediate thrill of 'big bang reforms' will be disappointed. However, it provides a good foundation for continued growth.
The fiscal deficit target of 3.5 per cent of GDP is a sign of fiscal responsibility, and means that this government is focusing on the long term, rather than relying on immediate gains through increased government borrowing and spending. This will also help preserve India's position as a bright spot in the global economy, and spur foreign investment.
The emphasis on the agricultural sector and the rural economy is wise, given the last two disappointing monsoons and the importance of stimulating consumption amongst the huge rural population. If the target of doubling farmers' incomes by 2022 is achieved, it will also directly stimulate the corporate sector due to the expansion of the consumer market.
Infrastructure spending is solid at Rs 2,21,246 crore, with Rs 55,000 crore being earmarked for roads alone. The announcement on reinvigoration of PPP is very welcome, but needs follow through. Specifically, lessons from the last massive round of PPPs need to be absorbed, and a lot of focus is required to make it attractive again for the private sector to go down the PPP route. Resolving disputes in existing PPP projects, which has been announced as a focus area, is important.
For lawyers, particularly corporate lawyers, there will be a lot of interest in some of the legislative and regulatory proposals announced, including the bankruptcy code, deepening of the bond and commodity markets, SARFAESI Act amendments and the proposed statute for Aadhar.
On the tax law front, the announcement on implementation of the GAAR, and the announcements related to retrospective tax amendments (including the one-time dispute resolution scheme, and high-level review committee) are significant, but details are required before the impact on foreign investor sentiment can really be assessed.