Finance minister Nirmala Sitharaman has walked a tight-rope well in her first budget. She has created room for bank recapitalisation and offered a window to NBFCs besides increasing the total budgeted capital expenditure versus the interim budget and still managed to achieve fiscal discipline.

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While one could argue, and rightly so, that the assumed nominal GDP growth of 12 percent does appear a tad too optimistic, even with 11 percent growth (provided the fiscal deficit amount doesn’t rise) the fiscal deficit to GDP would rise only to 3.37 percent from 3.3 percent. Sensibly, the tax revenue expectations have been reined in and the widely expected shortfall of about Rs 1 lakh crore in GST collections is expected to be made good through higher excise duties and non-revenue receipts like divestment.

Interestingly, the budget estimates higher dividend receipts from the Reserve Bank of India and banks and financial institutions by about Rs 23,000 crore, which also aids in shoring up the receipts. It is also important to note that Rs 75,000 crore has been set aside for the farmer income scheme and the amounts allocated for food and agri subsidies have been nominally increased. The borrowing programme should also remain unchanged as the fiscal deficit number has been retained at the earlier level. So an excellent job with managing the numbers, one must acknowledge. Now what remains is execution to ensure the targets are met.

First Published:Jul 5, 2019 6:03 PM IST