All eyes were on Finance Minister Arun Jaitley as he unveiled the Modi administration’s first budget on Thursday. There were high expectations that he would take radical steps to jumpstart the sluggish Indian economy that is seeing its slowest growth in two decades. Though no bold reforms were announced, Jaitley did propose plans to boost capital spending and to further open up the defence and insurance sectors to foreign investment.

"We shall leave no stone unturned in creating a vibrant and strong India," Jaitley said, promising to raise economic growth to 7-8 per cent a year in the next 3-4 years from less than 5 per cent now.

Jaitley announced that he would raise limits on foreign investment in the defence and insurance sectors from 26 per cent to 49 per cent – allowing the state to retain majority control – but still less than that sought by defence contractors to justify sharing technology if they manufactured in India.

The Finance Minister also promoted the use of renewable energy, particularly solar power. He proposed to set up ultra-mega solar power projects in 4 states – Rajasthan, Gujarat, Tamil Nadu and Ladakh in Jammu & Kashmir – as well as a project to develop 1 MW solar parks along the banks of canals. He also announced a separate programme to power 100,000 irrigation pumps using solar energy.

In another key initiative, the NDA administration is expected to implement the long-pending Goods and Services Tax reform by the end of this year, thereby unifying India's 29 states into a common market, boosting revenue and making it easier to do business.

The administration also plans to uphold the "daunting" fiscal deficit target for this year inherited from the previous UPA administration – 4.1 per cent of GDP – even though this would be a challenge as the UPA had allegedly used creative accounting to reach this optimistic figure.

"We need to introduce fiscal prudence. Fiscal prudence is of paramount importance. We cannot leave behind a legacy of debt," Jaitley said. "I have set a fiscal deficit target of 3.6% for 2015-2016," he declared.

The government expects to raise a record $10.5 billion from asset sales – four times what the UPA had collected from its privatisation efforts in the last fiscal year.

The Bombay Stock Exchange had reached an all-time high prior to the Budget with foreign investors expecting big reforms. However, according to Reuters, the measures announced by Jaitley fell short of bullish expectations and Indian stocks fell slightly by the close of trading.

Yet most analysts agree that this budget represents the first steps towards Prime Minister Narendra Modi’s long-term goals of strong growth, job creation, fiscal responsibility, and encouraging manufacturing and innovation. It’s evident that his administration plans to take up reforms on a rolling basis, not just through this annual budgetary exercise.

- Karan Singh