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Focus

“Union Budget -A missed opportunity,” say Experts

Jul 2009

The Union Finance Minister, Mr. Pranab Mukherjee has missed a golden opportunity to translate budget from poverty to prosperity which was an enormous and challenging task before him by putting disinvestment programme in right perspective, decontrol and deregulation of economy which would have given impetus to growth”, said Mr. Ramesh Damani, a leading Stock Market Analyst at a panel discussion on 'Implications of Union Budget 2009 -10' organized by the All India Association of Industries (AIAI) and World Trade Centre (WTC) in Mumbai recently.

Mr. Damani said by disinvestment in public sector to the tune of only 5% would have brought in the much-needed revenue for infrastructure sector and public programmes which would have also resulted in accountability of public sector to their shareholders resulting into better efficiency and growth.

There were many budgets presented so far, the first was the path breaking budget by Dr. Manmohan Singh in 1990-91 introducing economic reforms, then a dream budget by Dr. Chidambaram, Former Finance Minister. This budget can be called as ritual exercise as it does not give any direction for future path the Government will take towards economic policies which will stimulate the industries in view of the recessionary trend, he added.

Mr. Damani further said that the DEMAT accounts are in the ratio of 1:100 which the budget could have given thrust on disinvestment and other programmes which could have resulted in increasing the ratio to 4:100 which is possible the stock market earlier and what it is today is an example.

He commented that if disinvestment is a bad name then the government could give it a name in memory of any heads as given to various schemes existing today such as Rajiv Gandhi Shram Shakti Programe and no one would object such a programme but instead support.

Mr. Damani said we expected the Government to open up Insurance and Aviation sector. Because of this, I say there is a missed opportunity as the economy may not see higher growth which could have been possible if the Government would have given thrust to some of the important issues. Market would have rebounded and the world would look at the investment opportunities over here who are fence sitters today.

Today we could see growth in FMCG sector and rural sector but it could have been better if the Government could deregulate and make administration more efficient.

Mr. Firoze B. Andhyaruyjina, leading tax consultant said that one may appreciate doing away with Fringe Benefit Tax (FBT) and surcharge but education cess still remains. He said wealth tax provision introduced is nothing else but double taxation through back door.

Mr. Andhyaruyjina, further said Exemptions given are very meager and if the Finance Minister would have taken bold step by doubling the exemption there would be more money in the hands of middle class and consumers which would have resulted in growth.

Mr. Andhyaruyjina said the increase MAT from 10% to 15% which originally started from 7.5% will bring in many companies to rethink on investment and growth. The various sections introduced are not keeping in tune with indexing. Budget could have given various incentives to spur growth which was expected but not seen in Budget. So it can be called as ritual affair.

Mr. Vijay Kalantri, President , All India Association of Industries (AIAI) welcomed the increase in the budgetary allocations towards the development of Infrastructure, agricultural sector, the SMEs for export as well as the abolition of Fringe Benefit Tax (FBT) and Commodity Transaction Tax (CTT). “The higher allocation to Market Development Scheme and Rs. 4,000 crore Special Fund to be operated by Banks for SMEs and exports and extending tax holiday to exporters until 2011 would certainly assist the SMEs to revive from the recessionary trend,” he opined.

Mr. Kalantri commented that the government should have given some stimulus to the Small Scale Sector and Greenfield infrastructure projects such as road, highways and airport and not imposing service tax on railway and coastal Cargo component which the Government is proposing to levy.

“The exemption given to individual could have been much higher rather than a meager rise”, observed Kalantri demanding that Goods & Service Tax (GST) should be implemented by 1st April 2010 as announced in the Budget and the various simplifications announced for Direct and Indirect taxes should be implemented in letter and spirit by the concerned Department.

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