The Hindu Business Line : A balanced Budget

The Finance Minister has clearly acknowledged the need for more private sector participation and has talked about the Government’s focus in removing bottlenecks for investments and projects. The Government’s performance in the past gives us confidence that various ministries and departments will work towards achieving this growth target.

Tax reform

The Government’s commitment to introduce GST (Goods and Services Tax) by April 1, 2010 is indicative of its desire to reform the indirect tax system. Similarly, introduction of new direct tax code and making it open for debate makes Government’s commitment to reform the direct tax system apparent.

As mentioned by FM , the budget has to be seen in the context of the measures already announced and I am sure there will be several other measures that Government will announce progressively, to ensure that the economy returns to the 9 per cent GDP level at the earliest.

Personally, I would have been happier to see a more elaborate disclosure of Government’s medium term plan including disinvestments, subsidies and controlling Government’s administrative expenditure.

Corporate tax

Industry was expecting a drop in corporate tax rate or at least abolition of surcharge. No change in corporate tax has disappointed the industry. However, the fact that Government has almost left indirect taxes untouched is not disruptive and should be seen as positive.

The budget has increased significant allocation towards infrastructure including the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and on highway spending. This is a move in the right direction and I believe we need to continue to allocate significant material resources in this area for the next decade.

FM has tried to boost the rural economy by broad basing National Rural Employment Guarantee Scheme (NREGS). Hopefully, with monsoon reviving, the rural economy will again be the key driver for the overall growth.

Investment sops

I was also expecting introduction of incentives in the form of investment allowance for large and mega projects. India needs significant capital formation in the manufacturing and infrastructure sector and under the current economic conditions, the Government should encourage capital spending in large projects which can be globally competitive. There is nothing in the Budget which helps the steel industry directly although other growth measures may have indirect effect on the steel demand.

The author is Managing Director of Tata Steel