A big win for Narendra Modi has raised the outlook for a faster economic recovery led by a revival in the investment cycle. India’s economic growth was below the 5 per cent mark at 4.7 per cent in 2013-14, against 4.5 per cent in 2013.
Although the road to revival is not without its set of challenges, the Gujarat experience inspires confidence. Acceleration in much awaited project approvals, potential tax and administrative reforms and a focus on infrastructure and manufacturing should accelerate a recovery. The current government will focus on reforms and ‘development’, unlike the ‘inclusion’ agenda pursued by the previous government.
Budget expectations
The Budget will strive to balance the pursuit of growth and inflation control.
The Budget will strive to balance the pursuit of growth and inflation control.
We may see cuts in fuel and fertiliser subsidies in the Budget to curb both the fiscal and current account deficits.
The RBI has been pro-active, considering the funding requirements of the new government. It has cut the statutory liquidity ratio of the banks.
The Budget is expected to focus on converting farming into a profitable venture from a mundane activity conducted by a vast majority for subsistence, is anticipated. This will also be complimented by meeting the aspirations of a new ‘rurban’ (rural+urban) population
( Business Line dt. 4 July 2014 )
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