Like the Trinity of Brahma (The Creator), Vishnu (The Preserver) and Shiva (The Destroyer) play an all encompassing role in balancing the forces of nature, the FY15 Union Budget makes a fervent pitch for attaining a balance by creating growth, preserving an ideal level of fiscal deficit of 4.1% and destroying (supply side) inflation.
The Budget has created significant growth enablers, including the ‘Rurban’ push through allocations for 100 Smart Cities, `50,000 crore support for municipal debt management for infrastructure and ‘Ease of Doing Business’ by relaxing limits for FDI in key sectors like Defence and Insurance.
It has emphasised on preserving Savings for Investment and Fiscal Balance. The Budget stresses on the path of fiscal consolidation, with the objective of reaching the milestone of 3.0% fiscal deficit by FY17. Besides consolidation, the quality of adjustment has improved with subsidy expenditure reigned in at 2.0% of GDP, down from 2.3% in FY14 and capital expenditure increasing to 1.8% of GDP, up from 1.7% in FY14.
In addition, adequate sop has been provided for incentivising financial savings by relaxing the slab for income tax by `50,000, exempting resources raised by banks for long term infrastructure from regulatory pre-emption, extension of withholding tax for bonds and streamlining of KYC data across the financial sector. With improvement in economic growth, this will enable the Savings Ratio to move towards 32-33%, from 30.1% in FY13.
On the inflation control and management front, the creation of a Price Stabilization Fund to mitigate near term food price risks is a laudable initiative.