Finance Minister Arun Jaitley said the country will stick to the fiscal deficit target of 4.1% of gross domestic product (GDP) set by the previous government for the year ending March 2015. Jaitley added the fiscal deficit would narrow to 3.6% of GDP by fiscal 2015/16 and to 3 % by 2016/17.
Here are analyst comments on the Budget:
Radhika Rao, Economist, DBS, Singapore
"The initial trickle of proposals under the FY15 budget accords priority to fiscal prudence and a wide-ranging developmental agenda laid down by the new government. Achieving this year's deficit target might prove to be a challenge if the bullish revenue projections from the interim budget are maintained as well. Higher FDI limits are encouraging, but will require an overhaul on the infrastructure and the regulatory framework. Specifics of the game plan laid out in today's budget will be important to support the markets."
Nirakar Pradhan, Chief Investment Officer, Future Generali India Life Insurance, Mumbai
I think everything is better than expectations. FDI in defence and insurance have come which shows government is focussed on restarting the investment cycle. Fiscal deficit target at 4.1 % is also a positive surprise. The finance minister has a comprehensive package for all the issues and economic challenges that India is facing. I will look at increasing exposure to shares now. Equity is falling just on event-based profit-taking but will catch up in the near term.
Shubhada Rao, Chief Economist, Yes Bank, Mumbai
"Fiscal consolidation is a strong takeaway. The FDI in insurance and defence and the plethora of schemes for improving the rural economy with all round focus on development programmes, are a key thrust. It's a good beginning. For the 4.1 % target of the fiscal deficit, the heavy lifting may be done by PSU disinvestment and non-tax revenue streams."
Shakti Satapathy, Fixed Income Strategist, AK Capital
"It seems to be a neutral budget with positive light on key economic variables to tackle the current stagflation. Though targeting the earlier fiscal deficit of 4.1 % is a surprise favour to the market, the conviction of fiscal management in revenue and expenditure sides is being awaited."