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Straight from the Specialists

Budget FY 2012: A neutral event

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Finance Minister Pranab Mukherjee (C) arrives at the parliament to present the 2011/12 budget in New Delhi February 28, 2011.  REUTERS/B Mathur/Files(The views expressed in this column are the author’s own and do not represent those of Reuters)

The FY 2012 Union Budget is largely a neutral event:

The Budget provides incentives for increased infrastructure spending along with increased funding sources while highlighting supply side issues in agriculture with an effort to provide solutions.

It also creates an avenue for funding of the current account deficit (albeit still linked to capital markets) and creates a roadmap to rationalize subsidies, moderates expenditure growth and takes another small step towards the implementation of DTC and GST.

From a macro perspective, the budget was largely a neutral event. It did not make a major announcement of acceleration of key reforms. At the same time the government maintained restraint by not making populist announcements, such as immediate plans to please the lower- and middle-income sections of the population, considering there are a few state elections due in the current year.

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