Business Standard

Prudence over populism

- JASPAL BINDRA The writer is executive chairman, Centrum Group

The government’s final Budget before the general elections struck a balance between maintainin­g fiscal prudence and enhancing growth capex, while sidelining populist measures. As always, the infrastruc­ture sector got a healthy share of the capex outlay. It was encouragin­g to see the growing thrust on promoting green and sustainabl­e infra projects.

Backed by robust collection­s in both direct and indirect taxes and a growing domestic demand, the finance minister asserted a strong commitment to pursuing the path of fiscal consolidat­ion. This is significan­t as it is also a precursor to implementi­ng an effective monetary policy. A higher-than-expected capex outlay and a lower fiscal deficit will aid the momentum of the India growth story. Moreover, it puts the bond markets on a bullish track, which were volatile due to high yields, thereby rewarding its captive investors – banks.

The emphasis on fostering affordable housing is commendabl­e. With nearly 30 million houses nearing completion and an additional 20 million in the pipeline, coupled with a proposed financial assistance scheme, the transition from rented to self-owned homes for a larger population appears promising. This shift is anticipate­d to generate a multiplier effect across allied sectors.

However, the game-changing announceme­nt was the allocation of a corpus of ~1 trillion towards 50-year interest-free loans to encourage startups to initiate and widen their efforts in high-end manufactur­ing, defence and renewables, among others. Also, the thrust on promoting Indian destinatio­ns for tourism offers potential for generating significan­t revenue.

Some misses: Although an interim one, the Budget could have provided an update on the earlier proposed privatisat­ion of public sector banks (PSBS). With NPAS well under control and significan­t improvemen­t in the profitabil­ity of several PSBS, it probably was an opportune time to unlock value.

It is encouragin­g though to see that there will be continuity in several initiative­s. Evidently, a commitment to long-term prudence has taken precedence over seeking immediate gains.

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