The first NDA budget is consistent with the objectives for the government formulated by the Prime Minister.
The budget presents a true and correct picture of the financial health of a country and creates the framework to enable the government to accelerate economic growth and create jobs.
A budget can do no more. The rest depends on the implementation capabilities of the government. The record of Mr. Modi shows that he is aware of the importance of implementation and has the capabilities required to be effective in this area.
Fiscal prudence is a necessary condition for sustained high economic growth in the future. Mr. Jaitley has accepted this objective and his targets for fiscal deficit cannot be faulted by any one. The finance minister has not spelt out in his speech as to how the income would be adequately enhanced.
However, divestment of PSU shares, allowing banks to augment capital by selling shares to the public, a more targeted and effective use of subsidies and a reduction of expenditures on the basis of the report of the proposed Expenditure Management Commission are what appear to be in his mind. He probably expects higher economic growth to also result in better tax revenues.
The introduction of the GST now seems reachable, especially considering that in the past it was largely the BJP states that were not happy with the contents of the proposed Act.
Growth of industry and business would benefit substantially, as would state revenues, though over a slightly longer period of time.
The tax regime and the way the laws were implemented, has been a huge bottleneck for investment. This is being addressed. Retrospective taxation will not be introduced and past legislation and cases would be dealt with on the basis of a high level commission report.
Many other changes in the law are being contemplated.
Various steps have been announced to promote the financing and growth of infrastructure, another necessity for investments to increase. The PPP model shortcomings would be addressed.
The increase of FDI limits in defence and insurance will be welcomed by foreign investors, especially the provision that they can, via the FIPB route, have full management control. Manufacturing growth, job creation and reduced foreign exchange outgo would be the result in the next few years.
The move towards using technology in various areas of govt and business will give huge benefits to the economy.
The framework is in place. Now the real task begins.
(RC Bhargava is Chairman of Maruti Suzuki India Ltd.)