The Union Budget 2008-09 has been presented against a complicated macroeconomic backdrop of moderating growth and rising concerns over inflation. The political backdrop remained equally demanding with focus on the ensuing assembly and general elections.
As a result, the challenge for this Budget was to strike a balance amidst several counteracting agendas. As a whole, however, the budget carries positives mostly for three “A”s – agriculture and aam aadmi.
And, perhaps, carries the message of an early election!
The Budget emphasised on the need to contain inflation; at the same time, accorded priority to a faster and more inclusive growth with a focus on agriculture, infrastructure, education, healthcare, employment creation, and greater social equity. It also showed the government’s intention of carrying forward projects in infrastructure.
The increased outlay for highway development programmes, ultra-mega power projects, and enhancing power generation targets are heartening.
To focus more on the positives, the CENVAT has been reduced from 16 per cent to 14 per cent, along with reduction in excise duties, on sectors such as pharmaceuticals, heavy vehicles, small cars and two-wheelers, paper, and certain other mass consumption items.
The expected reduction in central sales tax from 3 per cent to 2 per cent is in line with the long term commitment of the government.
Besides boosting demand, such reductions in taxes will positively affect the general price level too, to a certain extent.
(Rashesh shah is the Chairman, Edelweiss Group)