New Delhi: Union Minister of State for Finance Jayant Sinha has said he is happy the way markets reacted to Union Budget 2016, but indicated the long-term effects will be felt only in a few years.
"In the long sweep of history, we need 10 or 15 years really to know whether a Budget has been truly historic or not," Sinha said at the 'CNBC-TV18 Mint Budget 2016: The Verdict' in Delhi on Tuesday.
"In the meantime, you get flashes," he added, referring to the rally in the stock and bond markets. According to Sinha, the reaction of the bond market was a better indicator of the credibility of the Budget.
The decline in yield on 10-year government bonds to 7.62 percent from 8 percent showed the bond market was convinced about the Budget. The fall in yields would reduce the government's debt burden and give it more finances to implement the various schemes for the deserving, he said.
Sinha said the success of Budget 2016 would depend on three pillars. He said the government had made a quantum change to public investment. "When people talk about roads, irrigation, railways, the temptation is to go to what is (the allocation) in the Budget," he said.
Sinha said part of the government's efforts have been to build off budgetary resources through series of innovative financing institutions.
He said the National Infrastructure Fund (NIF), proposed in the last Budget, would become operational this year and become a powerful driver of growth going forward.
"The whole approach to public investment by building it up and supplementing it with off Budgetary resources is going to be viewed in history as something remarkable," he said, adding that impact of NIF on infrastructure over the next 20 yeras would be as strong as the role played by the National Highways Authority (NHAI) in the growth of highways.
The second pillar, Sinha said was the government's attempt to change the tax ecosystem by repairing the relationship betwen the tax authorities and the tax payer.
He said the changes being made to dispute resolutions, penalties, appeals, online filing, assessments, among other would be viewed as as a genuinely transformational step.
The third and the most important pillar was the reforms being done in area of social security. "The statutory backing that we will be providing for Aadhar, the direct benefit tramsfer (DBT) mechanisms we are putting in place and the ability to be able to deliver benefits to people as targeted, the ability to provide health cover to our most vulnerable people is going to be truly historic," he said.
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