Updated on Wednesday, July 08, 2009, 21:06 IST

New Delhi, July 08: The PHD Chamber reacted positively to the budget, calling it “pro growth.” Mr. Satish Bagrodia, President, PHD Chamber said that the Budget was on expected lines reflecting the Government’s commitment of satisfying the aspirations of the aam aadmi even while striving to revive growth in the economy and address the problem of fiscal deficit.

The Chamber said that the Budget has provided a bold agriculture and rural thrust. There is a jump in expenditure in agriculture which is critical for improving farm productivity and rev up purchasing power of the rural populace. Similarly, a step up in investment in both physical and social infrastructure would go a long way to stimulate demand in the economy. A fillip to Bharat Nirman would address the problem of rural infrastructure. We welcome the announcement of full interest subsidy against loans of higher education and over Rs. 2000 crore for IIT and NIT.

This is essentially an expenditure Budget. There is considerable emphasis on public expenditure to fulfill our developmental priorities. The Budget has set aside sizeable funds to expand NREGA nationally and has increased fund allocation for social sector projects for empowering the weaker sections. Mr.Bagrodia is of the view that the rise in expenditure would create purchasing power in the hands of the poor which in turn would stimulate growth in the economy.

Besides, the government has also attempted to incentivise exports which are reeling under the throes of a slowdown. The continuation of interest subvention of 2 %, extending the insurance cover, increased allocation under MDA would help to buffer, to some extent, the negative fallout of falling external demand. At the same time, the near status quo on direct and indirect tax rates has been maintained, threshold limit on personal income tax and wealth tax has been raised and surcharge and the FBT abolished in accordance with the demands of the manufacturing sector.

There have been no radical expenditure cuts and no concrete step has been made to improve the delivery mechanism. The fiscal deficit may result in credit squeeze for trade and industry.

At the same time, the steep rise in the Minimum Alternate Tax from 10% to 15% of book profits is a matter of concern.

On the indirect tax front, the Budget has provided directional clarity on the tax reforms proposed in terms of ushering in GST. It is only a relief that the customs, excise and service tax rates have not been tinkered with. It also could be indication that in the dual GST structure, Central GST may be pegged at about 8%. However, the Government should have announced the phasing out of Central Sales Tax in the next year. No provision has been made to clear the outstanding and future liabilities of TUF.

The Budget has lost the opportunity to carry forward second generation reforms which are urgently needed in the scenario of global slowdown. There are no big ticket reforms on FDI, rationalization of subsidies, or even disinvestment.

It is hoped that the outlays are matched by outcomes so that the provisions of the Budget find their expression at the ground level.

Bureau Report