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Y.M. Deosthalee

Union Budget 2009-10 was presented by Mr Pranab Mukherjee in a totally challenging environment. The expectations were high and these included tax breaks, raising FDI limits in insurance, Government divestiture plans, capital market related measures and so on. In fact, some analysts were expecting the budget would lay down a roadmap for new-generation economic reforms. In the past, some of these issues were dealt with in the budget document.

However, it is not fair to expect one budget to address all of them. In any case, the Finance Minister can deal with these issues separately.

Given the difficult fiscal situation, he has done a fairly good maintenance job.

The reality is that we have a fiscal deficit of 6.8 per cent and the economy can ill-afford on further extravaganza. It is commendable that the Finance Minister has not made any significant changes in the tax structure and continued with stability and growth momentum.

On the other hand, there are positives such as removal of irritants in the form of Fringe Benefit Tax and Commodities Transaction Tax. The proposal to restore full exemption from excise duty on goods manufactured at construction sites, including pre-fabricated concrete slabs/blocks, will remove the doubts in this matter and reduce unnecessary litigation. While MAT is not a bad concept, it is not appropriate to levy tax on an income enjoying tax holidays.

The companies engaged in infrastructure need relief from MAT. The anomaly of excise duty structure for capital goods sector and serious disadvantage for domestic manufacturers against Chinese imports should have been addressed in this budget.

Finally, the budget does not address issues of governance, and it does not detail the roadmap for improving the fiscal situation, implementation of GST and achieving 9 per cent growth.

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