UNION Finance Minister Arun Jaitley has called his maiden budget a directional one. One hopes it will take the right direction and attain the right targets. He has said that he did not go for a big bang budget as many had anticipated. It is already the middle of the calendar year and big bang ideas need time to be implemented. He has attempted to shore up the economy by putting more money in the hands of tax payers and offering fiscal incentives for manufacturing. The emphasis will be on construction, manufacturing and infrastructure. Roadways will be the high road to growth. Jaitley did not talk big on areas such as disinvestment. The budget has accounted for Rs. 63,425 crore for disinvestment. But if it means selling shares in government companies, that will be on the wrong tack. Jaitley has made it clear that he has his eyes on containing inflation with RBI assistance. Despite tax breaks and increased expenditure, he will manage to stick to the current year’s fiscal deficit of 4.1% of GDP. Then there is the tricky question of subsidies on fertilizers and the anticipated increase in fuel subsidy in view of the Iraq crisis. In Jaitley’s opinion, Kerosene is often misused by the undeserving but he is sympathetic about LPG consumers. He has made one thing clear. Unlike the UPA government, his government will have precise targets and subsidies will go only to the needy.
Jaitley will introduce flexibility about the 2012 retrospective tax. But it will not be possible to raise the income tax exemption limit about Rs. 3 lakh. The Budget will widen the door for foreign investment in insurance and e-commerce and tourism will get a boost. But the burden of paying interest on past debt will be a drag. As for indirect taxes, cigarette smokers will be hit very hard. The health ministry may take heart!
