Finance Minister Arun Jaitley's Union Budget is a well-balanced act, as it intends to improve economy's growth in the long-term.
The first full Budget provides healthy direction to the economy. The focus is to grow with emphasis on financing, manufacturing and infra. Intent is to dramatically improve the economy with long-term target of 3 per cent fiscal deficit, increase savings and double-digit GDP growth.
GST which is likely to be ready next year is positive, and government has taken the right action like increasing tax share and responsibilities to states. But in the near-term, tax rate is likely to increase for corporate while changes in individual's tax is below expectation. Reduction in corporate tax in the long-term will be healthy for valuation.
This is a good start as government has clearly laid out the roadmap for taking the 'make in India' initiative to Defense sector.
Another major positive is government's plans for 5 UMPPs on plug and play mode. This is an indication of things to come over the long term in projects space in India. This would be extended to other infrastructure projects in roads, rail, airports and ports. That said, much more details will be required to know how 'make in India' for other manufactured products becomes a reality. As land acquisition and labour acts as key impediments for growth in this space.
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