View: Inclusive growth’s the goal, with fiscal prudence


Ravneet Gill

MD & CEO, Yes Bank

The budget can be seen as an enhancement over the interim budget. The finance minister has skilfully balanced the current needs of a slowing economy with the medium-term goal of scaling up the Indian economy to a level of $5 trillion by 2024-25.

The single largest feel-good (factor) obviously came from the headline of the budget arithmetic, with a reduction in FY20 fiscal deficit target to 3.3% of GDP from 3.4% announced in the interim budget.


This along with unchanged gross market borrowings of the government (pegged at Rs 7.1 lakh crore) and the idea of tapping overseas markets for borrowings favourably tip the demand-supply balance for G-secs, validated by the softening seen in yields on 10-year G-secs post the budget.

Going more granular, the reliance on increased 1) custom duties on several items 2) excise duties on petroleum products 3) spectrum auction proceeds of Rs 50,500 crore along with 4) disinvestments and 5) dividends from RBI/financial institutions on the revenue side make room for the envisaged double-digit growth of 21% in spending.

The demonstration of fiscal prudence was accompanied by according importance to reviving private investments, amidst the current slowdown in growth. As envisaged in the Economic Survey, the budget deploys a multi-pronged support structure to kick-start a virtuous cycle of investments via 1) reduction in corporate tax to 25% for 99.7% of companies 2) infusion of Rs 70,000 crore into public sector banks 3) one-time partial guarantee to high rated pooled assets of NBFCs 4) further relaxation of FDI in select sectors along with easing local sourcing norms in singlebrand retail and 4) eliminating the angel tax issue for startups. This should, in turn, help job creation and augment incomes. From a mediumterm perspective, the FM used the budget to lay down the government’s vision for the next 5 years; taking forward the reforms and achievements of the last term.

Specifically, commitments towards hard infrastructure such as phase 2 of PMAY, phase 3 of PMGSY, industrial corridors, Bharatmala and Sagarmala projects, UDAN scheme, PPP in railways, re-examining the UDAY scheme coupled with an envisaged revamped education policy, simplification of labour laws and the Ayushman Bharat scheme already in motion, should provide a wellrounded character to Indian economy’s impending growth.

Combining the signals from the interim and full budget, one can infer that the government has put an equal thrust on domestic consumption and private investment, with growth recovery being a derivative of both. The combined focus on lending support to rural economy, along with MSMEs, affordable housing and ease of living sends an emphatic message that growth must also be inclusive.

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