Home > Money > Budget > Budget News & Analysis MARCH 1, 2002 | 09:30 IST    Feedback 


     
Interviews
Business Headlines
Corporate Headlines
Columns


 Portfolio Tracker
 

  My Portfolio

The Union Budget 2001-02
Economic Survey 2000-01
Exim Policy 2001-02
Credit Policy 2001-02
Railway Budget 2001-02
Budget Tutorial
Budget Process
Budget 2000-01
Budget 1999-2000
 



'In the given situation, FM tried his best'

Kirit Somaiya

I feel that in the given situation, the finance minister tried his best to give momentum to the Indian economy. When the global growth is less than two per cent, the Indian economy has shown growth of 5.4 per cent.

Certainly, Indian agriculturist and coffee plantation are to be protected. Sinha's measure is in a way anti-dumping measure.

Nowadays, it cannot be said that stock markets reflect the economy. Last year, the market went up but the industrial growth is hardly two per cent. It is a 'kisaan friendly' Budget, touching the basic, core and infrastructure. The positive impact will be felt only in long duration.

Actually last year only finance minister has given ample support to indian motor industries. We have to support the Indian industry. Relaxation in customs duty has to be in phases.

Inflation rate is the lowest in the last twenty years. It is just 1.16. It certainly benefits the common man and the customer. Bringing down the interest rate helps the common customer and boosts the economy.

Every time the finance minister should not be popularist. Cutting down the subsidies, supporting the efficiency by withdrawing protection and removing APM certainly needs courage. This is going to benefit the common man ultimately.

It does seem like a low key Budget after a dream Budget of 2000-20001. Factually, it is rationalisation and simultaneously giving momentum to infrastructure and agriculture. One must accept a growth of more than six per cent in agriculture going to make available Rs 100 billion in the hands of comman man, which is going to boost rural and consumer economics.

The Budget will become popular once the second generation reforms are complete. As this year, the Budget has been concentrated on rural and agriculture economy, agricultural insurance corporation momentum to kissaan credit card and freedom to farmer is going to have a positive impact and going to make the BJP popular.

Raising of the LPG price will certainly impact the middle class. But simultaneously, the finance minister has also brought down the prices of petrol and diesel. In the open economy, the customer is going to be benefited in this.

In 1997, the then government decided to dismantle adminsitered petroleum mechanism prices. The finance minister is implementing that decision. It is certainly helping and going to support the efficiency. Petrol and diesel prices are being lowered in due course. LPG prices also will come down.

I think tax on dividend income will hit the big investors. Small investors will get tax benefit under Section 88. Actually, it was benefitting the bigger investor which is now rationalised.

The finance minister has announced full support to hi-tech, telecommunication, finance and insurance sectors. Marginal support is also extended to steel industry by bringing down custom duty by 10 per cent.

Price increase is only marginal. See the benefits: the golden quadrangle, the telecomunication kranti, urban development fund, infrastructure equity fund and push to housing sector is for common man.

Great support has been extended to rural housing. Income tax relief for the interst paid on housing loan is also extended by one year. In urban areas, the formation of urban incentive fund of Rs 50 billion, support for relief in rent control, Urban Cieling Act and stamp duty is going to benefit the housing industry.

There has been no change in direct taxes. Income tax slabs remain the same. The salaried class is not going to suffer. Five per cent surcharge for defence and security will have minor inmpact on high level tax payer.

The finance minister has announced various supporting package for special export zones. The export benefit in IT is also extended upto 2005.

For your information, the finance minister is a middle class person. His wife also sometimes expresses her satisfaction and dissatisfaction. I am sure that not only his wife, but women throughout the country will have relief that inflation has come down to 1.16 per cent from 10 per cent.

The Budget is for future generation. Incentives, momentum, benefit for communication, transport, power, finance and the insurance sector have long ranging effects.

I do accept the industry has not given nine out of ten marks. But in this diffcult situation, when every body was expecting a very hard and harsh Budget, is this not a relief that bringing down non-planned expenditure and incentive for infrastructure will have positive impact on industrial economy?

This time it is the kisaan who is benefitting. The Gram Sadak Yojana and the prime minister's dream golden quadrangle project is going to boost the economy.

This year also service sector growth is six per cent. Agriculture growth is 5.4 per cent. Foreign exchange reserves have gone upto $50 billion. Food grain production has gone upto 60 million tonnes. When the developed economies like Germany's growth is 0.8 per cent, USA 1.4 per cent and Japan -0.4 per cent, India's 5.4 per cent growth rate is remarkable.

I think the reduction in interest rates have negative impact in the short run, but ultimatelly it also reduces the burden on the industry which results into positive growth.

In India we have to develop discipline. A P J Kalam, our great scientist had asked once, 'Can you spare just ten minutes for your society and country?'

After the announcement of the Budget, the stock market reacted badly because dismantling the distribution and dividend tax has negative impact but i think it is only for the short run. Ultimately, in the longer run, the basic and infrastructure support will have the positive and permanent impact.

As far as import duties on computer hardware is concerned, the government intended to bring it down to zero level but it is extended to 2005 to support Indian hardware compaines.

Kirit Somaiya is a BJP Member of Parliament.

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
The Rail Budget 2002-03
The Economic Survey 2001-02
More Budget Stories
Money


 
  © 1996 - 2002 rediff.com India Limited. All Rights Reserved.