The Finance Minister has presented a realistic budget, which sets the stage for growth to be the centre of economic policy with the right environment for investment and stable conditions to make it easier.
For quite some time now, consistent efforts had been made to introduce the Goods and Services Tax (GST). But for one reason or the other, the final agreement proved elusive. The Finance Minister has now informed that the GST will be introduced before the end of the year. This, along with the Direct Taxes Code, will bring about a stable tax system, and will create confidence among investors.
The Finance Minister has provided for an investment of Rs.2.50 lakh crore by PSUs. This, along with investment in housing and other sectors, will once again take investment to 36 per cent of GDP and make it possible for the economy to grow at more than 8 per cent. The positive approach expressed by the Finance Minister will make foreign investment an effective supplement to domestic investment. The Finance Minister has opened up more areas for FDI, increased foreign equity holding to 49 per cent in insurance and defence, rationalised transfer pricing, changed dividend distribution tax, and stated that in future retrospective taxation will not be resorted to. The development that is likely to generate in the current year will be non-inflationary since investment will be supported by domestic savings. Apart from small savings schemes, concessions have been offered under Section 80C of the Income Tax Act by increasing the tax free investment from Rs.1 lakh to Rs.1.50 lakh and the interest on home loans from Rs.1.50 lakh to Rs.2 lakh. The Finance Minister has given close attention to the energy sector to make it more broad based and also grow faster. . One sector that required special attention was agriculture, which, after the Green Revolution, has not progressed well. New technologies have come to the market and have to be introduced in agriculture. Besides, the budget encourages post-harvest processing with a view to avoiding wastages. The budget is the first step towards a dynamic economy, which will take growth to new high levels in the next two years.
(The author is Chairman, RP-Sanjiv Goenka Group)