P.Chidambaram’s Budget for 2013 was not a dream budget but it could be worse. The parameters were adverse. Growth rate has been sliding down.The FM had to reconcile the need to woo investors with fiscal rectitude.Besides, the UPA II is headed for Parliamentary elections in 2014 and so the focus was on populism. The Budget decidedly had good features and presents facts for good cheer. Fiscal deficit has been contained at 5.2% of GDP for 2012-2013. And it looks targets may be met in the current fiscal. Standard and Poor has already indicated that there will be no further downgrade. Foreign capital infloors would be augmented to reduce Current Accounts Deficit. Incentives would be offered to different types of portfolio investors and it is to be expected that entry procedures will be simplified. Investment would be pushed especially in infrastructure and the private sector would be called upon to fork out half the amount of funds for capacity building. Emphasis would be on key areas such as roads, industrial corridoors, ports and trade to facilitate regional connectivity. Maybe tourism and real estate could be given more incentives.
Considering the rising cost of living, personal tax slabs and rates have remained unchanged. The exemption limit may, however, have been raised. As for indirect tax, existing rates of excise and service tax continue. First homebuyers would receive tax breaks while small taxpayers will benefit from a modified Rajev Gandhi Equity Saving Scheme. A 10% surcharge on those earning more than Rs 1 crore a year would be only fair. Hiking surcharge on firms with an annual income beyond Rs 10 crore may make businessman unhappy but does not show any intention of spooking investment. However, high input costs and interest rates will spike growth anyway. On the other hand, industry should welcome the investment allowance to those investing over Rs 100 crore in plant and machinery to boost manufacturing. CST related compensation for states should develop manufacturing and create jobs. Land and labour have been neglected. There should have been more casualisation of labour and generation of secure organised sector employment.
The direct tax benefit transfer scheme to be rolled out is a pro-poor move. But, no move to reduce subsidies has been made and that will hinder fiscal consolidation. The duty increase on cigarettes cannot be criticised but why has it been done for mobile phones costing more than Rs 2000? Mobile phnones are a great help to the Aam Aadmi. On the whole the Budget can be faulted mainly because it does not offer big ticket ideas to meet the slowdown while talking big about growth. Agriculture and the social sector have not received the stress they call for.