Financial Daily from THE HINDU group of publications
Saturday, Mar 01, 2003
A well-balanced exercise
THE Union Budget just presented by the Finance Minister, Mr Jaswant Singh, is a growth-oriented one, which leaves additional disposable income in the hands of the salaried class, which has had to face the brunt of taxation measures during the last three years.
This additional disposable income is bound to increase the demand for goods and services, which, in turn, should act as a catalyst for the economy which has already shown signs of recovery.
The Finance Minister has to be congratulated for taking a bold approach with regard to health insurance, social security measures, and the development of infrastructure in the country, which should yield long-term benefits for the economy and pave the way for an eight per cent GDP growth rate.
The introduction of the VAT regime from April 1 should signal the onset of more reforms. Mr Singh has also shown courage in trying to restructure Central Government finances while taking care of State Government finances, which should ensure fiscal discipline at all levels.
If he can stick to the task and bring about such discipline in the coming year, he would take the country a long way forward on the road to a consistent and robust growth in the GDP.
Overall, the Budget has been well-balanced in that there are no major inflationary and deflationary pressures except for the additional cess levied on diesel and motor spirit for infrastructure development.
The markets have been volatile as the experts and analysts are analysing the fine print, but they will turn bullish once the war clouds fade away and the Budget is properly understood.
With special reference to automobiles, the reduction in excise duty will result in lower prices for consumers and is likely to hike consumer demand.
As the focus of the Budget is on infrastructure, housing, construction, housing finance, cement, steel, automobiles and automobile ancillaries, these are the stocks that one should look out for.
One is confident that the markets will stabilise within a fortnight and an upward movement will begin, coinciding with Holi, the festival of colours, giving the punters every reason to sing Rang barse bhige...rang barse.
The author is a Director of Apeejay Finance Ltd.
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