The Hindu Business Line : Not enough for infrastructure

I have not read the fine-print yet but from what I have heard so far, this is a good intentioned Budget. Translation of intention to results, however, will determine future growth. For infrastructure creation, the crying need for the country, regretfully, the Budget has not done enough, though it provides some impetus to the power and automobile sectors.

The Budget would have received better ratings if it had more focus and commitment on infrastructure front. There seems to be hardly anything for ports, airports, urban housing and the construction sector. These are critical for the country to leap-frog into the big league in the global arena. The infrastructure deficit is growing at a rapid speed and needs to be addressed.One of the positive features is that the Budget provides stability and continuity, which will sustain the current momentum. The growth of the manufacturing sector should have been set at around 15 per cent as opposed to below 10 per cent to tap the full potential of the manufacturing sector.

Focus on education, both primary and higher education, are welcome steps. Setting up of 16 Central universities, three IITs and two IISERs will go a long way in creating the talent pool, which is a critical resource for growth. These institutions should be set up quickly, with world-class facilities and research. The Budget is marginally positive for the steel sector. Reduction in the peak excise duty and reduction of duties on project imports will have a positive impact on steel and other capital-oriented industries. Reduction of Customs duty on steel-melting scrap will not have any impact on Tata Steel.

Caution on waivers

While all of us have full sympathy with our marginal farmers and are indebted to them for providing food, we need to be careful that the move to waive loans should not distort the discipline in the credit system. The Finance Minister has referred to the steel industry in India as oligopolistic, but I wish to mention that the total steel production of India is less than half of the largest steel producer in the world. The size of each player in India is heavily sub-optimal, even now.

To meet the future steel demand of a growing nation like India, we need new capacities on a global scale and state-of-the-art technology. To facilitate new investments, the Government needs to provide a launching pad for investments in steel production by removing the existing hurdles.

Tax rationalisation

With the golden quadrilateral project almost completed, the Government should initiate similar projects for development of roads, ports and airports. This would lead to the development of automobile, cement and steel industries and promote large-scale industrialisation, creating greater employment opportunities.

The Budget could have given more focus on urbanisation by promoting measures that would lead to creating large, integrated townships in the urban and semi-urban areas.

The Finance Minister needs to be complimented for containing the fiscal and revenue deficits. Containing inflation remains a challenge.

Considering the higher collection of direct tax, I would have expected relief from the surcharge, which was introduced as a temporary measure. Also expected was more rationalisation and reduction in the Fringe Benefit Tax. The Government’s commitment to introduce GST by 2010 is welcome and this will have positive impact on industry and consumers, when introduced.

(The author is Managing Director, Tata Steel)

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