The Hindu Business Line : Balancing economics and politics

Ahead of national elections, the budget was widely expected to be populist. However, while paying heed to political compulsions, Mr Chidambaram has also tried to ensure that the nation’s growth agenda does not get derailed, and critical sectors such as infrastructure, education, public health as well as agriculture continue to get support.

On the whole, the budget endeavours to simplify the tax regime — a long-standing demand of the industry — while providing incremental tax relief to the professional and business communities.

Though there is no change proposed in corporate tax or surcharge rates, the move to address double taxation in the SPV structure due to dividend distribution tax is quite commendable.

Similarly, reduction in CENVAT (by 2 per cent), cut in central sales tax and custom duty relaxation on project imports are positive developments for indirect tax.

With regard to the core infrastructure segments, greater allocation for national highways (up by about 20 per cent to Rs 12,970 crore) and urban infrastructure (to Rs 6,870 crore) are heartening declarations.

Additionally, the move to set up a dedicated national fund for power transmission and distribution will go a long way towards narrowing the 11th Plan supply-side gap.

The proposal to establish a regulator for coal will initiate a much-needed mechanism for fair and transparent allocation of a scarce commodity (for various purposes including thermal power generation).

The emphasis on sports and related infrastructure ahead of the Commonwealth games, in conjunction with the in-principal support to incentivise tourism and hospitality industries, is bound to have a spin-off impact on commercial real-estate development and airport operations/development.

In a nutshell, the budget is a progressive one and has successfully managed to strike the fine balance between good politics and good economics.

(The author is Group Chairman, GMR Group.)

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