This Budget has been pragmatic with the view to improve medium term sustainable growth potential. The government had a tough ask to provide support to the economy without compromising on fiscal prudence.
The fiscal deficit target for FY20 has been maintained at 3.3 per cent of GDP versus 3.4 per cent in FY19. The government had extended stimulus to farmers through PM-Kisan scheme in the interim Budget.
Further, the support had been provided to housing and MSMEs segments. The government has shown clear intent to address the NBFC issue by providing guarantee for Rs 1 trillion worth of securitisation to buyers of pools up to 10 per cent of first loss and for first six months.
Efforts have been made to attract foreign capital via relaxation of FDI restrictions in areas like insurance, airlines and media, easier KYC norms for FPIs thus reducing the pressure on domestic borrowing. The revenue assumption looks marginally optimistic.
However, revised central GST collection expectation for FY20 has become quite achievable at Rs 6.6 trillion in FY20.
Since the government has adhered to fiscal discipline, it gives enough headroom for the RBI to ease policy rates by 50 bps or more in the remaining FY20. Overall, the budget is well balanced and the reform process is likely to continue.