Overall it’s a good Budget, especially given the challenge of both continuing to support growth and getting back to fiscal discipline. The positives are that it is moving forward on reform. Creating clarity about dates for implementation of the Goods and Services Tax and the Direct Taxes Code was important. It has moved in this direction by equalising excise and service tax at 10 per cent. It has also taken a big step on income-tax slabs. It has given a series of small but correct signals. It has had the clarity and courage to reduce the stimulus but gradually.
What was surprising, however, was the announcement of an increase in the prices of diesel and petrol. This was required but the timing, a day after a sharp exchange on price increase in Parliament, turned out to be unfortunate. Similarly, increase in the rate of the minimum alternate tax from 15 per cent to 18 per cent, with the provisions of the Direct Taxes Code coming into effect from April 2011 was, to say the least, unfortunate.
I believe food inflation and infrastructure constraints are issues that are likely to dog the economy.
What I admire in Pranabda is his sticking to the principle, but not being rigid about it, and making changes at the margin. The budget is full of such touches.