Only two negative aspects in budget: Adi Godrej
Negatives: Raise in MAT rates and not removing sales promotion expenses from FBT purview, writes Adi Godrej, CMD, Godrej Groupindia Updated: Mar 01, 2006 15:46 IST
The Finance Minister has presented a growth-oriented and forward looking budget. During the current fiscal, he has successfully relied on the growth in the economy for fiscal consolidation and he has rightly proposed to continue along that path for the next fiscal too.
It was particularly refreshing to see that the best estimates for this year project a tax collection increase of 21%. I was very happy to see that the expenditure on education both primary and tertiary is sought to be increased by about 31%. I believe that there is very little unemployment in India.
It is mainly unemployability. Ed ucation and training are the main solutions to increasing employment.
I was happy to see the Finance Minister announcing the objective of introducing a unified Goods and Services tax by April 2010. The development will considerably reduce indirect tax evasion, thus leading to strong fiscal consolidation.
It would also lead to about 10% reduction in prices of consumer goods which could lead to 1–2% increase in the GDP growth rate.
The other positives in the budget are the re duction in the peak customs duty rate to 12.5%, CVD on all imports and reduction of excise duty on processed foods.
The Finance Minister has also very sensibly reduced the aberrations in input and finished product customs duty such as in the case of industrial oils for soap.
The only two negatives I could see in the budget were the increase in the rates of the Minimum Alternative Tax (MAT) and in not re moving sales promotion expenses from the purview of the Fringe Benefit Tax.
I expect this budget to lead to a gross domestic product (GDP) growth of 8 per cent to 9 per cent during 2006-07 and a continuing fiscal consolidation which in turn will contain inflation and interest rates.
(The author is CMD of Godrej Group)