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Feb 27, 2010, 01.35 PM IST
Very balanced budget with greater focus on social reforms and infrastructure and simultaneously enabling and assuring industry of a stable tax regime
Joseph Massey
MD & CEO, MCX Stock Exchange Ltd
In addition, the fiscal discipline that will characterize the next three years is excellent policy. The Finance Minister’s calibrated targets of reducing the deficit in stages: first to 5.5%, then to 4.8% and finally to 4.1% of GDP are not only necessary but accurate and doable. At the same time, it is impressive that Planned Expenditure will stay much above the unplanned portion, which calls for an efficient balancing of books and fiscal discipline. The global ratings agencies will certainly take positive note.
The focus on alleviation of rural and urban poverty, while driving growth, truly gives an inclusive feel to this budget. There is also a focus on infrastructure, the environment and the development of the MSME and small scale sector, with a far sighted emphasis on enabling specific MSMEs such as hosiery and gems and jewelry, hence ensuring employment generation in a critical sector.
The tax relief to low and moderate income earners is welcome both in terms of driving up the marginal propensity to consume, the most positive outcome of fiscal policy that Keynes had prescribed, and also from a Monetarist standpoint of increasing investable surplus, which leads to capital formation. This is an excellent complement to the push for financial inclusion that the Finance Minister has reiterated in this Budget.
The specifics for financial inclusion, such as the drive to broaden the reach of financial services to any habitation of greater than 2000 persons, interest subventions, new banking licenses and the jump in allocation to Microfinance show a clear resolve for financial inclusion.
This Budget’s specific initiatives for broadening of the base for financial participation, such as, among others, the encouragement of the business correspondent model in microfinance, and the specific encouragement of mobile technology, are the national priority. We at MCX-Stock Exchange envisage a new generation of financial markets with the onset of new generation stock exchanges and inclusive growth being pursued by government. These together will create a broad, inclusive and better informed investor base with access to products across equity and other asset classes with state of the art technology and world-class service at competitive cost. This Budget will go a long way to enable us to realize this vision with even greater clarity and confidence.
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The Finance Minister has just presented one of the most exciting and reassuring Budgets seen in recent times. The first reassurance to sustain the recovery is that the fiscal stimulus package will not be abruptly taken away, but that it will stay until needed, and will be phased out in a calibrated fashion. This, along with the return to pre-crisis fiscal consolidation shows the excellent coordination between fiscal and monetary policy that has been the driver of the first phenomenal growth phase is back. The Finance Minister’s confidence that the economy will scale 9% and strive to reach 10% growth is well-founded. 
