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Towards a cycle of development

B.V. R Subbu

I think in many ways the Budget has talked of specific economic initiatives, especially in terms of investment in infrastructure and a new cash management system. What this cash management system will do is to reduce non-development expenditure. This means more money for development expenditure.

The Budget has talked about investing huge monies on infrastructure. It

has also placed greater emphasis on increased public-private partnership, especially in critical areas. A combination of all this could lead to a virtuous cycle of development. This, in my view, is the single most important critical takeaway from the Budget.

The Government is talking in terms of putting more disposable income in the hands of the people and has also reduced the effective price of cars.

What it means is that there will be a substitution effect. That is, consumers who were looking at an `A' segment car aligned within the boundary of their ability to pay, today find that they can go for a `B' segment car, thanks to the extra money available with them.

Likewise, those looking at `B' segment cars can actually think of going for a lower end `C' segment car. Consumers will move up the ladder. This may also hold true for those planning to buy a two-wheeler.

Whether they will go for an `A' segment car or go for a second-hand `B' segment will have to be studied. That is going to be visible, if not today definitely in the near term. That is the way to look at the Budget.

(As told to Business Line by B.V.R. Subbu, President, Hyundai Motor India Ltd.)

Article E-Mail :: Comment :: Syndication

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