Chanda Kochhar, Managing Director & CEO, ICICI Bank

The growth target of 9% set by the Union Budget is clearly a positive signal especially given the backdrop of weak macroeconomic conditions globally. The budget seeks to provide a contra-cyclical fiscal stimulus to facilitate this growth. The emphasis on infrastructure and rural development will help to improve productivity and prosperity in the country in the long-term. The government has made a clear statement of intent of its focus on infrastructure development through its various budgetary allocations. Actual development and implementation of projects will now have to take place through the PPP model. The refinance facility through IIFCL is now meaningful enough to play a key role in financing of infrastructure projects.

The budget also signals a move towards tax reforms, both on the direct and indirect taxes front, with measures towards simplifying taxes, increasing tax compliance and widening the tax base. The budget has left corporate income tax rates unchanged and has given some relief on personal income tax front. These measures would be positive for personal consumption as well as investment activity.

While the importance of fiscal prudence over the long-term and the government’s intention of returning to the FRBM targets as soon as possible have been emphasized, in the near term, financing of the government's programmes without distorting market interest rates remains a key challenge to be addressed. Greater clarity is needed on the targets for disinvestment and the way in which the government's borrowing programme for the current year would be managed.

Overall, the budget is supportive of growth and large investments in infrastructure, both in rural and urban areas, will create employment in infrastructure and related sectors. The budget would therefore help keep India on a growth path during a period of continuing economic weakness globally through its measures for strengthening the twin growth drivers of consumption and investment.