'One of the most populist budgets,' says economist Arun Singh

India set its fiscal deficit target for the year starting in April at 3.3 percent of gross domestic product, Finance Minister Arun Jaitley said on Thursday while unveiling the government`s annual budget.

Most analysts had expected the 2018/19 to be set at 3.2 percent of GDP. The deficit target for the year ending in March 2018 was also revised to 3.5 percent of GDP.

Comments 

Arun Singh, lead economist, Dun & Bradstreet, Mumbai

"This is one of the most populist budgets. If the government means to implement all the social, rural and infrastructure expenditure plans at very small changes on the tax front, I certainly have some concerns for the fiscal deficit target for the next year.

"We have seen inflation coming up in the last couple of months. An increase of the minimum support price for some of the crops has the potential to increase inflation rate going forward. I don`t see scope for an RBI rate cut."

Rajeev Singh, Partner, Deloitte India, Delhi

"Increased allocation for infrastructure projects such as national highways and Bharat Mala project in the union budget should give much-needed push to the (auto) sector especially medium and heavy commercial vehicles. Good rural focus will primarily help to boost retail growth in the rural market and thereby bring more growth in the auto industry." 

Rajan S. Mathews, Director General, Cellular Operators Associations of India, Delhi 

"Things like hot spots for rural areas, investment in Bharat Net, fibre connectivity, emphasis on artificial intelligence - all of those go forward as positive in terms of pushing forward the `Digital India` programme. However, disappointment lies in the fact that although resources are being allocated for infrastructure such as railways, the most important infrastructure element, digital highway, that is going to allow the digital economy to flourish, was unaddressed." 

"We remain disappointed that the concerns of the telecom industry with regard to financial help, reduction of levies, reduction of duties were not addressed."
Rupe Rege Nitsure, Group Chief Economist, L&T Financial Services, Mumbai

"While the budget indicates a pause in fiscal consolidation, its countercyclical measures augur well for growth. Increased emphasis on agriculture, rural and MSME (medium and small enterprise) sectors is most appropriate, as these sectors had suffered most due to demonetisation and GST. If implemented well, this budget carries the promise of reviving the economy in FY2019."

Padma Priya J, Director, Grant Thornton India LLP, Bengaluru

"Infrastructure sector got a further boost through increased allocations. Thrust on large infrastructure schemes and projects continue with rail and road sector getting an all-time high allocation, but the announcement to rationalise key linkages including `coal for power` and `power for rail` seems to be an important move." 

"The industry did expect some drastic measures to revive the private sector participation and improving operational efficiencies in the sector, but this has not been addressed."

Radhika Rao, Group Economist, DBS, Singapore 

"Overall measures have very strong social sector emphasis, which covers agricultural and rural sectors all the way to health and education sectors. Simultaneously, there is focus on infrastructure as well."

"As early as Aug-Sept last year, as the fiscal numbers were coming in, we were expecting a slippage in this target. But it has panned out. The bond market had expected fiscal slippage, I think it has not been as wide as feared."
"Divestment is expected to be much better than targeted for the first time in many years."

Sujan Hajra, Chief Economist, Anand Rathi Securities, Mumbai

"We were expecting (fiscal deficit of) 3.4 percent for the current year and 3.2 percent for the next year, and these announcements are slightly higher than expected. This is slightly negative for bond markets." 
"The long-term capital gain is a singular negative thing for the stock markets."

"With the agrarian crisis and unemployment situation, these kinds of policies are expected with or without elections." 

Shilan Shah, India Economist, Capital Economics, Singapore

"It was no surprise to us that they relaxed the deficit targets. It looks like the BJP is aiming to shore up support among rural voters, there have been plenty of measures announced to boost the rural economy. These are quite trademark things ahead of an election." 

"In cumulative terms, the deficit has already overshot the previous target, it had to be revised up, but it does need to demonstrate some kind of fiscal prudence. The deficit this year will be same as last year, I don`t think that comes as a surprise."