(Rajan Ghotgalkar is Country Head - INDIA at Principal International and Managing Director of Principal Pnb Asset Management Company [in association with Vijaya Bank]. The views expressed in this column are his own)

By Rajan Ghotgalkar

Over the years the Budget has rightfully ceased to be a platform for policy statements. However, this time there has been a fair bit of clarity in indicating the way ahead. It’s possibly the lack of transparency in conveying intentions than the actual announcements which give cause for anguish.

Markets may therefore have been comforted by the overall direction showed by the Hon. Finance Minister (FM) with regards monetary policy and withdrawal of fiscal stimulus.

The Finance Minister has also been upfront in acknowledging that the recovery is less than robust, especially when seen in light of the range of global pressures arising from the uncertainties surrounding sovereign debt and Euro banking systems. The withdrawal of fiscal stimulus has therefore been rightfully partial and cautious.

At least this time around the FM has amply highlighted the Government’s commitment to control the Fiscal Deficit, introduce the Direct Tax Code and pursue implementation of the Goods and Services Tax.

Further, by extending the 20% tax slab to Rs 8 lacs, he has provided relief to over 60% of the tax payers – a political sleight of the hand considering the clamour for relief amongst the salaried classes in light of soaring food inflation.

Overall there is a nice feeling derived from the budget’s positivity and growth orientation with visions of the ‘V’ shaped recovery expected to soon take us back to the 9 per cent GDP growth rates.

Actual rate of economic growth during 2009-10 will most likely come up over the 6.9 per cent estimates based on the final 3rd and 4th quarter figures. This is despite the 0.2 per cent negative growth in agriculture. Therefore, a GDP growth rate of 8 per cent during 2010-11 is not too far fetched if agriculture was to turn around as expected and capital expenditure also picked up.