The Union Budget for the current fiscal year is a pragmatic and honest budget. The increased allocation to physical infrastructure is a step in the right direction. The government has also incentivised the banking system to lend more to the infrastructure sector by providing 60 per cent refinancing of commercial bank loans through IIFCL over the next one and a half years. The Budget also aims to administer some stimulus by shoring up private consumption.
The Economic Survey had pointed out that a slowdown in private consumption is a risk area for this year, given the tough labour market conditions and caution on the part of banks on retail lending. Thus a tax relief to be provided to individuals through removal of 10 per cent surcharge on personal income tax, higher exemption limits and the abolishment of the FBT, should help in providing a fillip to private consumption and consumer sentiment.
The SME sector has been provided greater access to credit via a loan refinancing scheme of SIDBI with a corpus of Rs 40 billion. Addressal of administrative bottlenecks by permitting an exemption from maintaining books and advance tax for small businesses is an important incentive to simplify the life of millions of small entrepreneurs.
