No surprises on FDI front: Asit C Mehta

Budget reactions from Jyothi Prasad, Head- Investment Banking, Asit C Mehta Investment Interrmediates.

The budget's tone was positive and signaled continuing the reform and maintaining growth momentum. The optimistic view of the GDP growth estimated at between 8.75% to 9.25% set the tone for enhanced spending on the social sector. The FM stayed away on any big ticket reform. No surprises on FDI as expected such as FDI on multibrand retail. There is a stated intention to continue the government's disinvestment programme target of which is Rs.40,000 crores. This is welcome only if implementation is done more imaginatively as compared to the last round. Emphasis on infrastructure has continued, with focus on improving agri supply chain infrastructure such as storage and cold chains etc. which will be classified as an infra sub sector. But actual allocations were not large. Rs.30,000 crores allocated to PSUs and government agencies  such as IRFC, HUDCO etc. for allowing them to raise tax-free bonds is for strengthening infrastructure. However the concern is the slow and clumsy implementation in the sector and this problem will not go away. Strengthening of the banking sector through capital infusion of Rs. 20,000 crores is welcome and will give  boost to credit growth. Issue of new banking licenses has been discussed and so this will improve sentiment and provided transparency and strong eligibility norms are in place for such licenses, the banking sector will widen and deepen with more players coming in. Corpus of Rs.100 crores for Micro finance  sector equity support will give a boost to the small MFIs. The Government  wants to encourage the continued engagement of foreign investors in the Indian market