Spurring growth and social reform: Adi Godrej

The finance minister has presented an excellent Budget directed towards both economic growth as well as social development. The highlights to my mind are:

a) A clear indication to move towards a national goods and service tax in the future. Such a tax would make almost all consumer goods less expensive and thus create stronger demand. Such a reform would also lead to much lower indirect tax evasion and thus go a long way towards solving the nation's fiscal deficit problem.

b) The proposal to allow the tax payer to choose his or her savings mechanism in a neutral manner will, to my mind, divert a large amount of money towards the stock markets and would help spread the equity culture in the country.

c) The reduction in peak customs duty rate to 15 percent will help further globalise our economy.

d) I am very encouraged by the emphasis on infrastructure, rural development and gender encouragement.

e) The decision to permit minimum alternate tax as credit towards corporate tax in future years is a very welcome.

The negatives in the budget are as under:

a) The fringe benefits tax as it is laid out unfairly and perhaps unconstitutionally imposes a tax on expenditures incurred for genuine business purposes. Such a tax needs to be restricted only to actual fringe benefits.

b) The increase in surcharge on corporate tax will increase the rates of minimum alternate tax and the dividend distribution tax. The dividend distribution tax is now at a very high level of 14 per cent.