The Hindu Business Line : `Budget aims to boost farm sector'

BUDGET TALK: Mr K. Annamalai, former President , Coimbatore Stock Exchange, addressing a Budget meeting organised by Business Line Club at the Kongu Engineering College in Erode. — M. Govarthan

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Coimbatore March 6 The Budget 2007 aims to provide a boost to agriculture sector that has lagged behind others in development and it is a Budget for farmers, according to Mr K. Annamalai, former President, Coimbatore Stock Exchange (CSX).

But he did not share the post-Budget pessimism that has gripped the country's capital markets and viewed the sharp decline in the share prices as "panic reaction.'

Speaking at the BL Club meeting, organised by the Department of Management Studies of Kongu Engineering College (KEC), Perundurai in Erode district, he said it was the duty of a Government to ensure that the fruits of economic development were enjoyed equally by every section of the society. While the manufacturing sector witnessed a growth rate of about 10 per cent, the growth of the farm sector was a dismal 2.3 per cent against the expected growth of 4 per cent.

He said the Budget has sought to address the issue of accelerating the growth of the agriculture sector by not only increasing agricultural production but by increasing productivity as well. The Government also wants to bring more areas under irrigation and towards this end the budgetary allocation to agriculture has been increased. The other sector that would benefit is the secondary education.

Inflation check

Mr Annamalai said another area of concern for the Government was the rise in inflation. While the RBI had sought to contain it through fiscal measures, the Finance Minister had tried to rein it in by reducing the peak level excise and Customs duties.

The Prime Minister, Dr Manmohan Singh, has also underscored the need for keeping inflation under check without affecting the growth rate of the economy.

He said the Budget had a few proposals relating to the capital market but there was nothing in them to upset the market equilibrium.

The Minister had proposed a hike in the divided distribution tax from 12.5 per cent to 15 per cent, extension of MAT to the IT industries and bringing the ESOP under the ambit of FBT. The minister had stated that the methodology of bringing ESOP under FBT could be discussed.

He said the stock markets could breath easy because he had not sought to hike the STT as was widely feared and despite pressure from the Left parties to reintroduce long-term capital gains tax, the Minister has allowed the existing tax benefits in this respect to continue.

The percentage of corporate tax and individual income-tax also has been left untouched though the percentage of educational cess has been increased.

Among those who attended the meeting were Dr A.M. Natarajan, Principal, KEC, Prof. P. Suresh Kumar, KEC and Mr D.Rajkumar, Senior Regional Manager, The Hindu, Coimbatore.