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BY: Mahesh C. Purohit
The finance minister missed an opportunity to spell out the government’s views on its design.
The maiden budget of Finance Minister Arun Jaitley was presented amidst high expectations. After all, a decisive election mandate is always considered crucial to execute an economic rebound. However, such great expectations cannot be matched by a budget and what is possible for it to deliver, given that it is a short-term document. Given this limitation, the budget has excellently attempted to tackle the issues of an ailing economy inherited from the past government.
This budget aims to achieve three objectives: attaining a high growth rate for the economy, controlling inflation and achieving fiscal consolidation. To fulfil these objectives, Jaitley’s budget has followed the path of uplifting the economy in the short term and giving it direction in the long term.
The first priority of the budget is, therefore, to take steps to gradually repair and revive the economy so that it has the ability to shift to the fast growth-rate track in the medium term. In doing so, this budget makes an attempt to fulfil the expectations of the common man, domestic consumers and foreign investors. The budget provides some tax relief and expects an increase in consumer demand. It puts more money in the hands of the people by raising the exemption limit and the concession on housing loans and small savings.
It also attempts to create stability in the tax regime by suggesting abstinence from making retrospective amendments and proposing to set up a specialised committee in the tax administration to review disputes that have emerged from the Finance Act 2012. Similarly, the proposal to rationalise transfer pricing rules and the introduction of provisions for advance pricing will help in reviving investor sentiment.
The second priority is to boost growth drivers. Agriculture has been accorded high priority. Efforts will be made to develop supply chain linkages, ensure the reorientation of the state Agricultural Produce Market Committee acts to establish private markets, set up a price stabilisation fund and rejuvenate warehousing and cold storage facilities. The UPA flagship scheme, MGNREGA, has also been refurbished to link it to asset creation in the agricultural sector and to avoid waste.
The budget also focuses on various sectors in the short as well as long term. These include defence, infrastructure, health, education, textiles, road construction, food processing and tourism for employment generation through the skill development programme. To provide the requisite investment in some of these sectors, foreign direct investment up to 49 per cent is also proposed to be invited.
Finally, with regard to fiscal consolidation, the budget has continued…