We have witnessed an excellent Budget by the finance minister. The proposals were an exercise in a balanced approach to all major macroeconomic issues, especially growth. I would say the proposals will lead to containing inflation, an acceptable level of fiscal deficit and a nine per cent-plus GDP growth.
There was a strong indication from the finance minister that we should expect the introduction of the goods and services tax (GST) in the next financial year. The decision to introduce the constitutional amendment for GST was backed by an important decision of not increasing the excise duty, which is at 10 per cent, the likely rate of central GST. Once GST is introduced, it will lead to much lower rates of inflation, the indirect taxation on consumer products will come down by five percentage points. The fiscal deficit would decrease as excise duty evasion would come down by upward of 90 per cent. Further, the GDP growth rate would go up by one-and-a-half to two percentage points other things being equal. So, all in all, GST would be the single most important reform after the 1991 reforms.
An increase in exemption limits for income-tax is an important step in increasing consumption by the middle class and will give a boost particularly to the consumer goods sector. A similar effect will be seen from the reduction in surcharges from 7.5 to 5 per cent.
Adi Godrej,
Chairman, Godrej Group