Nitin Desai's article "Mr Jaitley's Budget imperatives" (June 19) rightly points out that the first Budget of the new government should not be a bonanza for the taxpayers by offering giveaways. It would be naïve to assume that the stock markets have zoomed in the last couple of months as market participants expect large tax sops. The reality is that investors, both foreign and domestic, are gung-ho since they believe that the Modi government would initiate some far-reaching measures to pull the economy out of the morass it is in today. Tough measures, as signalled by the prime minister, are widely expected and would be welcomed by the markets if they are likely to put the economy back on the high-growth path.
To suggest that the finance minister should announce three-year targets for fiscal deficit and tax-to-GDP ratio is unrealistic since the government has to manoeuvre expenditure in line with the evolving situation. Also, revenues may not always follow the pre-determined path, as we have witnessed in the aftermath of the global financial crisis and its subsequent partial recovery. The best way, therefore, is to take one step at a time and progressively bring these ratios to desired levels. The finance minister must, however, lay down a clear road map for carrying out long-awaited reforms aimed at creating a healthy economic environment.
Naveen Sood Indore
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