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All?s well with reform agenda: Uday Kotak

The best part of the Budget is that it contains no surprises, writes Uday Kotak, MD, Kotak Mahindra Bank.

india Updated: Mar 01, 2006 17:40 IST
Uday Kotak

The FM has done well in not taking on a confrontationist role with respect to some sections of the Left. The Congress will have to fight its battles with its allies on the sidelines in a non-disruptive manner. Chidambaram has given very sedate one-line advice to the Left in his speech. While committing the government to the implementation of the CMP, he has simply requested them to cooperate.

The best part of the 2006-07 Budget is that it contains no surprises. If at all anyone needed proof that India Inc. is well on course on the reforms agenda, this is it.

Tax proposals are getting into a zone which will put them beyond tinkering and economic constituents need not worry on this front any longer. Therefore, all of us can now focus on the immediate and ongoing tasks of building our businesses and institutions.

Thus, the Budget’s simple statement is that the government will focus on what constitutes its policy goals of creating level playing fields and economic empowerment of weaker sections of society. Through a simple measure, by including pension schemes and bank deposits in Section 80C, the government has created a level playing field for financial players who compete for long-term savings.

This Budget, in many ways, can be called the ‘Infrastructure Budget.’ As far as the metropoli tan/urban physical infrastructure is concerned, the government can act only as an enabler. The required specific initiatives have to come from the communities concerned and prospective stakeholders. The more important part of the infrastructure where no one other than the government can be the creator is the one that relates to rural India and social sectors. These are embodied in the Bharat Nirman initiative and the poverty alleviation programmes.

Bharat Nirman sets ambitious targets for rural physical infrastructure in the shape of accelerated irrigation benefit programme, accelerated water supply, roads, homes, electrification and telephone connectivity for rural areas. The social sector initia tives focus on universal education, mid-day meals for schoolchildren, drinking water, child development, rural employment guarantee and urban renewal programmes. These initiatives solely lie within the government’s purview, and resources have been substantively directed towards ensuring outcomes in these areas.

The biggest threats to economic prosperity come from poverty, ignorance and disease. While the government addresses these threats, other economic entities in the manufacturing, services and agricultur al sectors need to fulfill their roles in delivering economic prosperity.

The FM has done well in not taking on a confrontationist role with respect to some section on the Left. The Congress will have to fight its battles with its allies on the sidelines in a non-disruptive manner. P. Chidambaram has given very sedate one-line advice to the Left in his speech.

While committing the government to the implementation of the Common Minimum Programme, he has simply requested them to cooperate.

On the fiscal front, containing the current year fiscal deficit to 4.1 per cent of GDP and projecting the same to be 3.8 per cent of the GDP is a remarkable achievement even if it is achieved on the back of strong GDP growth. That is how it should happen.

I expect the international rating agencies to recognise the commitment on the fiscal front and respond with a substantive rating upgrade for India. The fiscal responsibility goal and the GST objective should go hand in hand in the years to come.

(The author is executive vice-chairman & MD Kotak Mahindra Bank)

First Published: Mar 01, 2006 11:49 IST