The Hindu Business Line : Building from brass-tacks

With the presentation of the 2005 Union Budget, a silent revolution is on its way. Sectors that are crucial to the country's growth such as agriculture are in for a complete overhaul, as well as macro-economic growth in the fields of education, health and rural development has been accorded focussed attention.

THIS budget is one that will would usher in a quiet revolution by focusing on the fundamental needs of the economy, particularly the rural sector, development of which is vital to our country and fulfils the dream of the Government for an all-inclusive growth.

Union Budget 2005-06 was one where corporate India had low expectations and the common man, especially in the rural area, harboured high hopes for having his aspirations reflected in this year's budget.

India Inc has seen some positive steps by way of reduction of corporate tax and rationalisation of other duties and taxes.

There is much to celebrate for rural India and `Bharat Nirman' in the form of a four-year business plan will initiate a more holistic development of rural India. While the details are yet to be firmed up, there is no doubt that the vision for building rural India has now found concrete provisions in this year's budget.

On the macro-economic front, the focus on the burning issues that face our society viz, education, water, health, rural development and agriculture is very clear and the outlay on each of these sectors is heartening. While much more would have to be done in the years to come, a decisive process has been set into motion.

The introduction of specific schemes based on gender, for SC/ST and for the backward states of Bihar, J&K and the North-East are steps in the right direction.

On the infrastructure front, the setting up of a Special Purpose Vehicle Fund using foreign exchange reserves is a good beginning even though the limit of Rs 10,000 crore may be considered modest. The increased allocation for highways is also a step in the right direction. These measures would certainly accelerate investment and generate employment.

The rationalisation of custom duties, especially the abolition on ITA bound items is a welcome step and would give boost to infrastructure sector, particularly Telecom.

The focus on the manufacturing sector, especially on traditional sectors with huge growth opportunities, like textile is welcome.

One of the big steps taken in the budget is in terms of tax reforms — both direct and indirect. On the indirect front, reiteration of VAT from April 1 2004 is welcome.

On the direct tax front, a significant hike in the marginal limits for individuals along with an additional deduction of upto Rs 1 lakh in specified savings is notable. Reduction of corporate tax from 35 per cent to 30 per cent, even while reducing depreciation allowance ensures that India's headline corporate tax rate is now in line with other favourable tax regime countries. The set off of the minimum Alternate Tax against future profits fulfils a long demand of the industry, particularly the infrastructure sector.

For the telecom sector, the good news is removing mobile phones from the elitist 1/6 scheme under Income Tax. The sector will also benefit from reduction in duties. However, not seeing a reduction in the burden on the consumer by way of very high license fee is a disappointment. I do hope that the consumers get to see this relief during the course of the year.

(The author is Chairman, Bharti Enterprises.)

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