Belying lower expectations of the markets and people in general, the government has delivered a very positive and inclusive budget, keeping growth and reforms agenda on track.

Fiscal consolidation will be continued resulting in lower than budgeted deficit of 5.1 per cent in current year, which is further set to go down to 4.6 per cent in FY2011-12. This may possibly come through as a consequence of non extension of the tax benefits presently available to software exporters which are set to end this fiscal year, and proportionately higher nominal growth of the economy. While ideally one would have expected the finance minister to roll back the remnants of the fiscal stimulus to boost revenues and thereby reduce deficit, he has chosen not to do so and yet bring in fiscal discipline through lower government expenditure. Such a step is bound to give a big fillip to the economy, which otherwise was expecting a rollback of some of the stimulus measures. This apart, a very big policy initiative is to enable any one from any part of the earth, to now directly invest in or put their money into domestic equity mutual funds. This will be good for our markets.

After a slowdown or inaction on reforms, the government now seems to be firm on pursuing further reforms and its intention articulated by the finance minister in his budget speech seeking to introduce bills on banking, insurance; pensions and companies in this session or this fiscal year will restore confidence of the foreign investors.

In the budget, the finance minister has ensured renewed thrust on the rural infrastructure and agri economy with higher allocation of Rs 58,000 crore for Bharat Nirman and proposing to invest in a four-point programme to improve agri productivity and storage. This will boost the economy and result in more entrepreneurs in rural India, and will help increase opportunities for AFCs to partake in this credit requirement.

Lower fiscal deficit and lower than expected borrowings of government will definitely help in better liquidity and interest scenario for the private sector including AFCs. The finance minister has taken measures on rural housing by setting up of a Rs 3,000 crore fund, increased limit to Rs 15 lakh from Rs 10 lakh for interest subsidy and increased limits of priority home loans to Rs 25 lakh from Rs 20 lakh. All these will lead to overall growth of affordable housing and related core sectors such as cement, steel, transportation and financial services for these sectors. Movement of the cement industry to ad-valorem method of excise is a well directed move in this direction to boost infrastructure growth.

Though budget announced an increased FII limit on investment in infrastructure from $5 billion to $25 billion and higher infra spend at Rs 2.14 lakh crore, we would have liked to see more concrete measures on infrastructure project execution and streamlining of related governmental clearances. Even now, land acquisitions, environmental clearances and local government or political issues continue to keep stalling many worthy infra projects. Even on the funding side, there is no direction in this budget as to development of long term corporate bond market, a must for sustaining private participation in infrastructure development.