The second budget of the finance minister has set a positive direction for reforms while carrying out deft juggling that meets aspirations of many sections of society. The highlight of the Budget has been to bring down the fiscal deficit to 5.5 per cent as promised, not an easy task. In view of industry’s request and assessing the progress of recovery, the finance minister has left the stimulus measures largely unchanged, except for an increase of 2 per cent in Cenvat.
Industry can rest assured that its expanding investment will not be constrained by government borrowings. While due emphasis has been laid on expenditure control by addressing subsidies on oil and fertilisers, social sector spending has been enhanced. The roadmap for reducing public debt as spelled out by the Thirteenth Finance Commission further reiterates fiscal discipline. The jump in infrastructure spending will greatly help industry.
A clear statement has been made on delivery of public services, among three central challenges of the Budget. The announcement of a date for the new Direct Tax Code and Goods and Services Tax will help industry prepare for the major forthcoming changes. Additionally, re-calibrating income tax slabs leaves more money in the hands of consumers and boosts industry prospects, while the increase in turnover limits will boost the small sector.
