By Ritesh Jain, Chief Investment Officer, Tata Asset Management The Budget has a clear thrust for the rural economy while taxing urban and top of the pyramid consumption. It carries the highest ever allocation to MNREGA — remember, MNREGA expenditure had been coming down in the last three years adding to the rural stress. Allocation to the agriculture, roads and allied sector has been increased with infrastructure spend at an all-time high but the subsidy route has been avoided (efficient spending) while thrust is on job creation. The nature of allocations to irrigation, roads, rails, etc, shows that the schemes are more structural/constructive in nature than cosmetic. The good thing is that the government is sticking to its initial disposition of clampdown on black money, subsidy rationalisation and push for job creation. Various estimates have put the black economy on a par with, if not higher than, the real economy. Reduction of tax on unaccounted income to 45% from 60% is more realistic and will actually increase the effectiveness of one-time declaration window. Bringing this money back into the real economy can have significant productivity benefits and keep a lid on inflation. Sticking to 3.5% fiscal deficit target, while provisioning for large portion of the Seventh Pay Commission and OROP is very credible and clearly shows that the focus is on effective implementation of existing schemes. The revenue assumptions, unlike the last couple of years, are more realistic and achievable. The move to gradually give capital to PSU banks is prudent as PSU clean-up is a long haul. And of course, with the Budget delivering what Dr Rajan clearly hoped for in Davos earlier this year, a small rate cut can’t be far away. There is a clear emphasis on making taxes more efficient and reducing opaqueness in tax dispute handling. The Budget focus on process simplification and speeding clearances to promote small and medium business and supporting entrepreneurs also lends credence to the ‘Make in India’ and ‘Skill Development’ initiatives. Building trust in this fragile global environment will stand India in good stead for years to come. So, while the Budget is structurally positive in the medium term, no room to spend and a tight fiscal stance will act as a dampener for capital markets. As in the past, execution will remain the key. (Disclaimer: The views expressed are of Tata Asset Management Ltd and are in no way trying to predict or time the market. The views expressed are for information purpose and do not construe to be any investment, legal or taxation advice. Please consult your Financial/Investment Adviser before investing. The views expressed may not reflect in the scheme portfolios of Tata Mutual Fund)