If you were expecting sweeping reforms in this Budget, you would be disappointed. The Budget comes across as realistic. The finance minister held out five lofty objectives - boost demand, encourage private investments, remove supply bottlenecks, mitigate malnutrition and improve delivery system, governance and transparency. However, one doubts whether the budget has really done full justice to these intents.
While there is status quo on the direct tax rate structure or direct tax code (DTC), the indirect tax push from 10 per cent to 12 per cent is likely to fuel inflation thereby, impacting consumer demand and corporate profits, further dampening direct tax revenues.
For the fast moving consumer goods (FMCG) sector, an increase in excise duty rate could impact the bottomline and may also impact consumer demand in case of an eventual price rise.
On the regulatory reforms such as Companies Bill, Goods and Service Tax (GST), DTC, FDI in retail, the budget did not suggest any definitive steps. This may not auger well for an emerging economy like India.
Importance of fiscal responsibility has been highlighted, also symbolically, through making FRBM a part of the Finance Bill. However, 'outcome' will be more crucial than 'intent'. The increased revenue from higher indirect tax rates must be well spent for its desired impact on the economy for inclusive growths. It is good that there is some movement on recognising the reality as regards to subsidies.
More could have been done to reduce stagnation in agriculture. However, it is good to see the overall focus on Aadhaar, mobile banking and e-governance; importance to fiscal responsibility and focus on infrastructure building.
Harsh Mariwala, Chairman & managing director, Marico