Kudos to dada. We shall appreciate our FM for presenting such a pragmatic budget. Its true, there are no major policy announcements. It is also true that FDI in retail is not yet open.
But,
If you look at it as whole, it is has almost everything that our country and our economy needs to day. It has basically addressed three major concerns:
a) Agriculture
b) Manufacturing and
c) Inflation
FM has exactly done this. By doing this, he has achieved another balancing act. What is that? He knows that to counter inflation, he shall increase interest rates. So that deposits will attract money back to banks and it reduces the circulation of money in open market. That increases money value and drives the prices and thereby inflation, down.
But increase in interest rates deprives cheaper credit to manufacturing sector. This is exactly where our FM has shown uncanny ability to handle the situation. Solution lies in the nature of the problem itself.
This inflation is not because of excessive supply of money. It is because, lack of supply of agriculture produce. He also knows that inflation is the result of the supply side problems. This is another way of looking at the challenge and handling all at once.
Therefore the solution is to provide support to agriculture and increase the production.
AGRICULTURE
Adding cold storage to infrastructure list can be regarded as major step towards right direction. It has addressed the core of supply chain issue. Cause, we are all aware, it is lack of distribution of agriculture produce not production of it, which has created scarcity. So are, your cold storages, soft loans to farmers, capex of fertilizers to treat as infra expenditure, so on and so forth. This increases agricultural production eases pressure on prices. This shall drive inflation down.
MANUFACTURING
It requires cheaper credit. On the other hand, as far as the manufacturing is concerned, he has shown his wisdom by leaving excise and customs almost untouched. These measures along with reduction in surcharge and marginal increase in MAT would definitely allow manufacturing sector to grow. Again, targeting that the contribution from this sector shall reach 25% of GDP in decade, would imply that the many more sops are in offing.
As far as service sector, it is excluded as it is a very healthy baby, it has shown how to take and it has got some giving to do now. Service sector has grown enough. Major revenue can be obtained from this sector. Agriculture badly needs support and it is required. Manufacturing sector requires a long term helply hand.
CHALLENGES
Major cause of concern is to address deficit through sale of assets and not out of revenue receipts or reduction of expenditure. Another major concern is oil prices. The prices of crude oil are soaring due to disturbances in Middle East. If they remain high, FM has nothing in his hands to offset the effect of it.
