In the backdrop of a tight fiscal position and slowdown in growth, Finance Minister P. Chidambaram has been able to deliver a pragmatic Budget.

The Budget has focussed on making growth more inclusive, taken some concrete steps to kick-start growth and resisted the temptation of populist measures, given that this was the last full-fledged Budget ahead of 2014 general elections.

At the macro level, it sticks to the fiscal consolidation roadmap with a target at 4.8 per cent of GDP for 2013-14. There are worries over current account deficit, rightly so, and given the Budget’s emphasis on attracting foreign capital to tackle it, we may see some announcements in the weeks to come.

The stock market reacted negatively but expectations had run ahead of the ground situation and thus, cannot be taken as a verdict on Budget proposals.

While there are no big-bang announcements, a number of enabling steps have been taken that will take benefits of growth to hitherto untouched areas in the coming years.

There is a genuine effort to deepen and widen the insurance market.

Insurance companies can open branches in Tier II cities without prior approval of IRDA, and banks will be allowed to act as insurance brokers.

Similarly, Rashtriya Swasthiya Bima Yojana has been extended to number of categories including rag pickers and mine workers. First-time home buyers have been given sizeable tax break on interest portion of home loans.

The Budget has also lots to offer for the financial markets. STT has been cut to encourage volumes though a small commodities transaction tax has been levied on non-agri commodities.

FIIs can trade in currency derivatives and use their investment in corporate bonds and gilts as collateral to meet margin requirements. Another positive is that RGESS has been extended for three successive years with an increase in income limit.

A big push for raising funds for infrastructure projects has come by way of allowing infrastructure companies to float tax-free bonds of up to Rs 50,000 crore in 2013-14.

However, one also expected the Budget to restore the exclusive limit for investment in these securities.

Given the bottlenecks in constructing roads, a road sector regulator will be set up, a much-needed step. Another positive is that construction of 3,000 km of roads will be awarded by September.

While an increase in surcharge on corporate tax and dividend distribution tax is mildly negative, the Finance Minister has assured the corporates that they will be only for a period of one year.

On the whole, the Budget has stuck to the basics, kept tax rates steady and attempted to make growth more broad-based with due consideration for macro-economic compulsions.

(The writer is Chairman and Managing Director, Religare Enterprises.)

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