The Finance Minister said India will become a $5-trillion economy over the next few years

Finance Minister Nirmala Sitharaman today announced few measures aimed at tackling slowing economic growth by giving tax reliefs to corporates and relaxing foreign direct investment norms while taxing the super rich. In the first Budget of Prime Minister Narendra Modi's second term, the government where on one hand looked to boost investments in aviation, insurance, media and single-brand retail, on the other, it tightened its fiscal deficit target to an ambitious 3.3 per cent and set target to make India a $3-trillion economy in the current fiscal year. Ms Sitharaman's first Budget - described by PM Modi as one that will boost India's development in the 21st century - was full of mentions aimed at simplifying the taxation process, both in terms of direct as well as indirect taxation, with very little to cheer for the common man.

The Finance Minister also exuded confidence that India will become a $5-trillion economy over the next few years.

"This budget is one that will make the nation prosperous and empower the people, it will give strength to the poor and a better tomorrow to the young people," the Prime Minister said soon after the presentation of the budget in the Lok Sabha.

The government said it saw fiscal deficit at 3.3 per cent of GDP in the current financial year, a reversal of the relaxation to 3.4 per cent announced in the interim Budget.

Most economists said the budget strikes a reasonable balance between growth prospects and fiscal prudence.

"Additional areas of spending have been created not at the cost of higher fiscal deficit," said Garima Kapoor, economist and vice-president, Elara Capital, describing the tightening of fiscal deficit target as "heartening".

Joseph Thomas, head of research, Emkay Wealth Management, said: "Focus on affordable housing and infrastructure is noticeably higher compared to earlier budgets... Commitment to restrict fiscal deficit is a good intent, but we need to look at the revenue assumptions more closely to draw more comfort."

The government announced major changes in excise and customs duties applicable to commodities such as gold and fuels. Taking advantage of easing crude oil prices, the government proposed to impose additional duty and cess of Rs 2 per litre on petrol and diesel, which is likely to make the fuels costlier for the consumer. It also hiked the import duty on gold and other precious metals to 12.5 per cent from 10 per cent.

The Finance Minister vouched to invest in agricultural infrastructure and job creation. She said the government will support private entrepreneurships in driving value-addition to farmers' produce from the field and for those from allied activities.

"Annadata can also be Urjadata," she said.

Some also raised concerns about revenue collections and inflation.

"Agriculture sector is a major employment generator in the country and is currently reeling under stress. Hence, Sitharaman's focus on agriculture and rural sector is a welcome step," said Anagha Deodhar, economist, ICICI Securities.

In tax proposals, Ms Sitharaman said the government will levy a TDS or tax deduction at source of 2 per cent for cash withdrawals above Rs 1 crore a year, in its bid to promote digital transactions.

The government brought a larger number of companies under the lower tax rate of 25 per cent. All companies with an annual turnover of Rs 400 crore will attract a 25 per cent tax, instead of Rs 250 crore. Ms Sitharaman said with this change, "only 0.7 per cent of companies will remain outside this rate (25 per cent)".

The government proposed a relief in the securities transaction tax, applicable for dealing in equities.

"This budget is a mixed bag with a significant increase in taxation for the wealthy. Also, the increase in excise duty for petrol and diesel will stoke inflation," said Abhimanyu Sofat, head of research, IIFL Securities.

The Budget proposed to provide Rs 70,000 crore worth of additional capital to state-run banks and promised to give the RBI more teeth to regulate shadow banks. The government also set a target of Rs 1 lakh crore for disinvestment proceeds in the year ending March 31.

Ms Sitharaman proposed to permit filing of income tax returns using either Aadhaar card or PAN card, a move widely expected to strengthen the taxpayer base.

Non-resident Indians (NRIs) may get Aadhaar cards on arrival, without the mandatory waiting period. NRIs currently need to have spent 180 days to be eligible for an Aadhaar card.

The Finance Minister said the government will ease foreign direct investment (FDI) restrictions in single-brand retail, and open up FDI in aviation, insurance, media and animation sectors. Also, the government will allow foreign investors to buy debt of listed real estate investment trusts.

The finance minister emphasised the need to strengthen infrastructure in order to enhance connectivity. The government will upgrade1.25 lakh kilometres of roads over the next five years at an estimated cost of Rs 80,000 crore, she said.