Post-budget 2018 Reaction Ms. Reshmi Khurana, MD & Head of South Asia, Kroll

The budget announced today was along the lines expected. As the last pre-election budget of the NDA government, this budget is a balancing act between boosting rural spending to appeal to the rural voter base and managing the fiscal deficit expectations of foreign investors and economists. The government’s focus on increasing health spending to the rural poor, increasing the MSP of all crops, free power and gas connections and introducing Wi-Fi locations should all appeal to the rural population, which suffered the most through the 2016 demonetization drive of the government. The key question is whether these actions are enough to get the NDA across the winning line with the rural segment, in the next elections. A number of these initiatives are complex so it will be important to see how quickly they trickle down to the intended recipients. The long term capital gains tax is not surprising and gives the government a good message to go with in the upcoming state and general elections – one of taxing the rich and capitalized segment of society. Overall, the budget is consistent with expectations and the messages that this government is comfortable with taking through to the elections.