Looking at the current global uncertain economic environment, the Budget is a pragmatic and realistic one. The approach to the Budget is very clear – focus on more inclusive growth, invest more in infrastructure, create mechanism to give financial support to some of the ailing sectors of the economy, expand the tax base, bring efficiency in subsidy spending and focus on transparency by taking some steps to arrest black money.
Overall, while there are no big bang reforms or changes in the Budget, it strives to maintain status quo, providing hope to sail through a difficult year.
The move towards a “Medium-term Expenditure Framework” statement which will set forth a three-year rolling target for expenditure indicators is a good sign. The focus on controlling subsidy bill under 2 per cent of GDP for 2012-13 and at 1.75 per cent in the future years will give comfort to watchdogs who were worried about the subsidy bill going out of control. The focus on infrastructure, health and education is a step in the right direction. The move to increasing tax base for service tax and increasing service tax and excise duty is understandable looking at the need to increase tax revenues for the Government.
It is, however, disappointing to see that no clear timelines have been specified on implementing some of the big ticket reforms like GST, DTC and FDI in multi-brand retail. The focus on bringing transparency in public procurement will result in increased spending on IT by the Government. The industry had not expected any big change in the tax regime. However, the industry requested some clarity and certainty on the application of tax laws. Hopefully, the Government will provide necessary clarity through administrative circulars to bring in greater certainty on tax position for the industry.
Overall, it is a well-balanced, pragmatic and realistic Budget.
(The author is Chief Financial Officer, Infosys Ltd)