The focus being more on the “aam aadmi”, Finance Minister Pranab Mukherjee quipped that he has taken a calculative risk for growth.
The highlights
This is India’s biggest ever budget as an expenditure of more than Rs.10 trillion has been incurred.
However, there is little to cheer for the common man as the retail prices of commodities are still on a high.
The inflation rate has been floating at around 9 percent and with a hike in petrol and diesel prices, the matters might become worse.
On the other hand, to encourage use of environment-friendly bio-fuels, petrol and diesel blended with bio-diesel obtained from vegetable oils are fully exempted from the ambit of excise duty.
Otherwise, the basic excise duty on most of the commodities and the service tax have been left untouched at 8 percent and 10 percent respectively.
However, an exemption in the tax limit has brought some relief for the middle income group. It has been raised by Rs.10,000 which means that an average person will be able to get a benefit of Rs.86 per month.
On a similar note, the exemption for the senior citizens has been raised by Rs.15,000. This will help them save Rs.129 every month.
But the middle income group complains that the budget is biased in favour of the higher income group because of the abolition of income tax surcharge. This implies higher the income, lesser the tax.
Experts' verdict
Experts feel that the exemption is not sufficient. “The exemption is paltry and it won’t matter much,” said Amar Pandit, a Mumbai-based financial planner.
This budget propels a growth in infrastructure related activities so that more projects can be undertaken and the common man benefits out of the same.
The removal of fringe benefit tax (tax on the perks) brings some liberation for the corporate sector.
The main highlights of this year’s budget are that it has pumped in huge amounts into the rural job guarantee programme by increasing the present limit of Rs.16,000 crore to Rs.39,100 crore, a 144 percent increase from the last year.
“It is a balanced budget. With various initiatives announcements, rural consumption will increase,” said Ness Wadia, joint managing director, Bombay Dyeing.
“The budget has focused on growth and enhancement at rural levels and this will drive demand for consumer products,” said Saroj Poddar, chairman, Poddar Heritage Enterprises.
Challenges ahead
Not surprisingly, the fiscal deficit for the current year is Rs. 400,996 crore.
But it seems that the finance minister has made a calculative speculation through investments in infrastructure and the rural economy, hoping that it will result in benefit in the form of higher growth.
There are three major challenges confronting this year’s budget, one is regaining the 9 percent GDP growth, other is making development inclusive and last one improving the government’s delivery mechanism.
Let’s see how well the budget meets these requirements.
