Budget 2016-17: Credible but badly packaged

I would evaluate the Budget for 2016-17 using the following framework. What has it done to address rural distress, banking sector recapitalization and need for increased public investment? Can it do the above and meet the fiscal targets through better monetization of government assets, rather than resorting to steep taxation or being overly populist? Are there any signs of fundamental reform in tax policy and administration, ownership of public sector assets and expenditure reform?

First, the positives: Bond markets will love the 3.5 % fiscal target, and net borrowing program of Rs 4.25 lakh crore, lower than Rs 4.41 lakh crore in financial year 2016 and market expectations. Bond yields compressed by 15 basis points on Monday.

The numbers also seem credible: nominal gross domestic product (GDP) growth has been assumed at 11 %, with tax revenues rising only slightly faster at 11.5 %. On non-tax revenues, spectrum receipts look aggressive at Rs 1 lakh crore, while disinvestment/strategic sale receipts of Rs 56,500 crore, though possible, have never been achieved.