A great start to making it easier to do business in India

THE upbeat Economic Survey tabled in Indian parliament a day before the federal budget on Feb 28 provided an optimistic vision of the country's future. It predicted that India's gross domestic product (GDP) would grow between 8.1 per cent and 8.5 per cent in the next financial year. And in terms of prediction for Budget 2015, the survey indicated it would likely "continue the process of fiscal consolidation", but in a "limited" way. The results of the survey are welcome and set the stage for the budget.

The high expectation around the budget made Finance Minister Arun Jaitley's tough job tougher. The time is such that on this budget hinged a lot of India's dreams and future. But Mr Jaitley laid out his proposals with utmost prudence and sensitivity. The budget speaks loud and clear about the government's approach to change and helps reinforce the country's confidence in its vision.

In his budget speech, Mr Jaitley announced that he would delay the fiscal consolidation road-map by a year. He forecast that the fiscal deficit will be 3.9 per cent of GDP in 2015/16, against the 3.6 per cent targeted under the Fiscal Responsibility and Budget Management Act. He explained that rushing into a preset fiscal consolidation plan will not be pro-growth. Where the target is enhanced because of capital expenditure is not bad, the government needs to understand the finer details. He further said the government will formally codify the proposed monetary policy targeting regime, in conjunction with the Reserve Bank of India, although this will require amending the Reserve Bank of India Act. The objective is to keep retail inflation below 6 per cent.