The Hindu : `Budget fails to provide impetus to economy'

Online edition of India's National Newspaper
Friday, Mar 01, 2002

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`Budget fails to provide impetus to economy'

By Our Special Correspondent

NEW DELHI FEB. 28. For once both the trade unions and chambers of commerce and industry appeared to be together in criticising the union budget for 2002-03. If the trade unions dubbed it as a ``WTO- oriented budget'', major chambers of commerce and industry were disappointed.

With nothing much in the budget to cheer about in the crucial economy management exercise, the industry said the Government had failed to provide a growth impetus. Further the individuals have been burdened by taxes and withdrawal of saving incentives.

The AITUC, the CITU and other Central trade unions said `` the budget provides concessions for big business, MNC luxuries and an attack on the middle and lower class people. It is a budget which provides no investment in social sector''.

While there was nothing in it to generate employment, the budget instead seemed to be aimed at downsizing the employment in Government and other sectors. It would also hit the Indian industry, besides producing a cascading impact on prices of essential commodities. The increase in the price of LPG and kerosene would hit the middle class and common people, the labour organisations said.

Hitting out at the fourth successive budget of the Union Finance Minister, Yashwant Sinha, as `average', captains of the Indian industry and trade chambers said the exercise lacked the much-needed fiscal stimulus needed to boost the economy amidst global recession .

While many corporate leaders denounced the Government for its failure to boost industry and investment sentiments, moderates described the budget as a mixed bag aimed at

sustaining the current growth rate.

The Bajaj Auto chief, Rahul Bajaj, said the budget was `anti-individual and anti-stock market' as a result of which commoners would have to pay more through taxes while there was no incentives for savings and investment.

``This budget is unlikely to boost higher growth rates, and may at best sustain current growth rates. I would call it an achievable, deliverable budget,'' the Confederation of Indian Industry (CII) president, Sanjiv Goenka, said.

Mr. Goenka said that while provisions for the infrastructure sector and some for manufacturing were growth-oriented, a lot was left to be desired in sectors such as power.

The FICCI president, R.S. Lodha, commented that "budget lacks the much-needed fiscal stimulus which was needed to boost the economy amid global recession. We are capital scarce economy and priorities should have been to woo more investment in the country.''

While Mr. Lodha said the industry was expecting widening of tax slabs, instead of surcharge on personal tax, the ASSOCHAM president, K.K. Nohria, said reimposition of

dividend tax was a retrograde step and would burden the industry. However, he added, the budget proposals displayed a `balanced approach' to fiscal issues.

The PHDCCI president, Arun Kapur, said the budget had failed to announce radical measures to kick-start the economy and added that the various proposals do not give a clear picture of the Government's fiscal policy.

Airing its disappointment, the apex body of exporters, FIEO, said it did not give the much-needed relief to exporters. Venugopal Dhoot of Videocon Group said the consumer durable sector had not gained anything but added that the cut in interest rates will boost demand. ``Interest rate cut would help boost TV sales financed through loan schemes'', he said.

Even as Shashi Ruia of Essar Group said the budget was a disappointment for the power sector though the shipping industry had much to cheer , the president of the Confederation of Tourism Professionals, Subhash Goyal, lamented that the tourism industry had not been treated on par with software and infrastructure in the budget. The president of the Hotel Association of India, Lalit Suri, welcomed the `first-ever road map' for the tourism growth spelt out in the budget.

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