We all knew that the worst was over and economic recovery was on. But the apprehension of a slowdown in recovery was still very real and was clearly a deterrent to any drastic action, particularly on the stimulus withdrawal front. He truly had a extremely tricky job on hand to keep the growth engine on its recovery path without jeopardising his growth objectives, Mukherjee has quite rightly effected a partial roll back of the stimulus with a marginal increase in excise duty rate from 8 per cent to 10 per cent and kept the service tax rate unchanged at 10 per cent. This is quite appropriate given the dominance of the sector in the economy. To drive the growth engine back to its full capacity he has taken care to keep the purchasing power of the middle class intact through some deft rationalisation of the income-tax slabs.
The focus on the social sector is welcome. With enhanced outlays in education, health and rural development, I expect clear dividends both in terms of reach and impact of the government’s flagship programmes. Ariculture has been a key focus area for the Finance Minister with enhanced investment in productivity and processing improvement measures and improvements in the supply chain. The concept of developing 60,000 ‘pulses and oilseeds villages’ in rain-fed areas will boost production in these two areas in the days to come.
Recapitalisation of public sector banks is a move in the right direction to secure health of the banking sector. New banking and NBFC licences will surely help in increased penetration of the sector. Quite rightly, financial inclusion, too, constitutes a key focus area with a target to cover all 60,000 habitations with population in excess of 2000.
Investment in infrastructure, particularly in areas of road and rail transport and energy, too, has received a clear impetus.
The Finance Minister’s bold disinvestment agenda was expected after the successful completion of disinvestment in public sector units like Oil India Ltd (OIL), National Thermal Power Corporation (NTPC) and Rural Electrification Corporation (REC) during the current fiscal. The Finance Minister has reasons to be buoyant, setting a target in excess of Rs 25000 crore during the coming year.
The corporate sector, despite the over all growth orientation of the Budget could be a little disheartened by the increase in Minimum Alternate Tax rate by 2 per cent. This may adversely affect the internal resource generation capacity of the corporates.
It’s a remarkable Budget for the simple reason that the Finance Minister has managed to reconcile two seemingly conflicting objectives. I strongly believe the Budget will help us consolidate the gains registered during the last few months to quickly revert back to the 9 per cent growth rate.
The writer is chairman and MD, Bharti Airtel