Financial Daily from THE HINDU group of publications
Wednesday, Mar 01, 2006


News
Features
Stocks
Shipping
Archives
Google

Group Sites

Opinion - Budget


Pragmatic, with few surprises

Prashant Ruia

Some major policy initiatives such as freeing coal reserves for captive allocation for power, fertiliser and steel units will go a long way in improving our competitiveness.

The Finance Minister has presented a positive and pragmatic Budget and one with very few surprises. The planned allocation has been stepped up by 20.4 per cent and most of the increased allocation is going for projects such as Bharat Nirman, irrigation, drinking water, etc. These investments are likely to increase the demand for manufacturing products such as steel, and cement and end use products such as cars, consumer durables etc.

The Budget has addressed the inverted duty structure faced by many industries such as steel, chemicals and paper, etc. The decision to impose a 4 per cent CVD on imported products provides a level playing field for domestic manufacturers.

Some major policy initiatives such as freeing the coal reserves for captive allocation for power, fertiliser and steel units will go a long way in improving our competitiveness. The Government's commitment to encourage investment in refining, pipeline and green fuel projects is a step in the right direction for ensuring energy security for the country.

However, a lot more needs to be done in this regard as a strong energy sector is of strategic importance to the country in order to enable it to maintain its fast rates of growth.

The Budget is high on intentions but what remains to be seen is how well these intentions are actually followed on the ground. The Budget already seems relatively modest on carrying out direly needed Next Generation reforms.

By reducing the peak duty from 15 per cent o 12.5 per cent, India is comparable to the ASEAN tariff levels. However, this is without any backup in the form of enabling domestic reforms.

The industry expected some far-reaching reforms, such as policy to commit natural resources to domestic manufacturers; financial sector reforms to maintain low interest rate regime; freeing up Indian companies to access global capital/debt market without end use restrictions in order to make available international capital for investments; taxation reforms to reduce transaction costs and incidence of taxation; de-reservation of items reserved for Small Scale Industry and labour reforms from this Budget. However, these have not really come about. No major measures have been announced to improve India's export performance.

We hope the Finance Minister will revisit some of these areas and address the genuine interests of the industry to truly make India a global hub for both manufacturing and services.

(The author is Director, Essar Group.)

More Stories on : Budget

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
Full credit on the farm front


BACK TO POPULISM OF YORE
Big bonanza for the small car
A difficult task well done
Boost to booming economy
Not rocking the boat
Mixed impact
Encouraging competition
A `taxing' exercise
`Chai' with masala
Harnessing winds of continuity
Growth and equity
Undertone positive
Sad call for telecom
Continuity in momentum
Enhanced need for funds
Pragmatic, with few surprises
Ensuring the trickle-down
Budget hits all the right notes
No major reaction
Gathering pace
Judicious tinkering
Wiring up the nation
Taxes not recovered crossed Rs 1,11,000 cr
Services sector provides Rs 23,000 cr
Let down on CST
The wind is blowing, take cover!
A touch more than a stitch in time
Duty rationalisation for man-made textiles — More allocation for textile schemes; Rs 189 cr for textile parks
A few goodies for rural impetus, lower costs
Excise duty cut, a boon for small carmakers — `Small cars' are Maruti 800, Wagon R, Zen, Alto, Hyundai Santro, Indica diesel
No special drive: auto parts sector
`There's further scope for reducing raw material duties to Asean levels'

A positive program
Metals: Reflected lustre
A draft of demands
NBFC granted audience
Sighs of relief and dropped jaws — The FM seems content more at not ruffling many feathers
A liberal look to fringe benefit tax — FM has delivered what he had promised
Accent on digitisation — The income-tax offices will undergo business process re-engineering
How the tax breaks pan out
Tepid changes to corporate tax
Tame docile budget
Educational loans



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line