Senior Associate
Lexicon Public Relations & Corporate Consultants Limited.
(A Fleishman-Hillard International Communications Affiliate)
14-Community Centre, East of Kailash
New Delhi-110065
Budget Reaction
A balanced Budget
The Budget this year appears to be a balanced one with the thrust on inclusive growth. Government has decided to keep the fiscal measures going for stimulating the economy. The Plan expenditure is higher by Rs 40,000 crore than what was mentioned in the interim Budget earlier. If we are lucky and have adequate monsoon, the Government's efforts may yield good harvest for the economy. The challenge for the Government would be to contain the Fiscal deficit which is set to reach 6.8% of GDP (around Rs 4 lakh crore) and return to the provisions of FRBM as soon as possible.
Allocations and spending in the rural economy through initiatives like enhanced allocation to NREGS, Bharat Nirman & PMGSY will not only work for the upliftment of the rural areas but will also help in the overall GDP growth of the country as the rural economy is unaffected by the global crisis. Increased spending on infrastructure will ensure liquidity in the market without increasing the fiscal deficit of the Government considerably.
On taxation front, the Government has done a commendable job by not increasing taxes despite such rigid fiscal conditions. Extension of Sunset clause is a welcome step considering IT Service industry is the key to
Extension of weighted deduction on R&D expenses in manufacturing will help in promoting innovation. Reduction in customs duty on various consumer goods will boost private consumption.
Increase in MAT, no increase in IT exemption for home loan interest and no headway on the divestment front were some of the disappointments. However, one cannot get everything from the Budget. There are constraints which the government has to deal with and given the current circumstances, this is a decent Budget.
To spur private participation in healthcare, the sector needed infrastructure status. Tax cut on import duties of medical equipments will allow healthcare institutions to access state-of-the-art med equipments.
Capacity expansion of all levels of education with a focus on faculty production and training is a welcome step. Infrastructure expansion in Higher Education will lead to increased enrollment rates which had been dwindling alarmingly. The focus on employment oriented vocational education will also boost enrollments in higher education institutions.
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