The new Indian government's debut budget – which set out ambitious fiscal consolidation and economic growth targets – is a step in the right direction, but lacks crucial details on how it will turn its aspirations for "a vibrant and strong" economy into reality, say economists.
Thursday's budget was a major test of new Prime Minister Narendra Modi's commitment to carrying out the reforms needed to get Asia's third-largest economy back on track.
"Our big picture reading from the budget statement is that policy makers are moving in the right direction… However, we believe that the reform agenda remains under construction," Chetan Ahya, economist at Morgan Stanley wrote in a report.
"The government will have to provide the finer details and implementation plans of today's announcements and will need to articulate its plans on other critical reforms," he said.
Delivering the budget, Finance Minister Arun Jaitley said the government aims to get growth back up to 7-8 percent in the next 3-4 years – levels not seen since 2011. The economy expanded 4.7 percent in the fiscal year that ended March 31, the second straight year of sub-5 percent growth.
The fiscal deficit target, meanwhile, was left at 4.1 percent of gross domestic product (GDP) for the current fiscal year ended March 2015, a positive surprise as many economists expected an upward revision to take into account unpaid subsidy bills left behind by the previous government.
The government looks to reduce the deficit to 3.6 and 3 percent of GDP in fiscal 2016 and 2017, respectively, from 4.6 percent in fiscal 2014.
Economists say while the government's commitment to maintaining the trend of fiscal consolidation is positive, its targets appear unrealistic.