Budget 2013-14 comes in the wake of a challenging global economic environment and slowing domestic growth. It addresses macroeconomic concerns holistically through multiple growth drivers, including investments, savings, and different sectors.
A pragmatic and realistic effort, its topmost priority has been to contain the fiscal deficit and reviving growth. The fiscal deficit was cut to 5.2 per cent for the ongoing year through stringent measures to control expenditures; this is being carried forward by setting a reasonable target of 4.8 per cent for the forthcoming year. A judicious mix of revenue generation and expenditure controls has been deployed towards this. Within this context, enhancing Plan expenditure by almost 30 per cent is indeed a laudable feat.
BROAD MEASURES
Outlays for education and healthcare have received an impetus, stressing inclusive growth. Moreover, steps have also been announced for skill development such as excluding vocational training from service tax net, and incentivising participation in skill development courses. This should enhance access to opportunities and improve productivity of our human talent.
Social security has been addressed through micro-insurance schemes and special outlays for vulnerable sections of society. We particularly welcome the enhanced gender focus of the Budget. The Nirbhaya fund offers security for women, while the dedicated bank for women opens up new entrepreneurship opportunities through access to funds.
For industry, there is a major emphasis on infrastructure that would frame better prospects for industry in downstream and upstream sectors. A slew of measures relating to finance and regulation are on the anvil. CII had called for a regulator for the roads sector which was announced. The development of industrial corridors in the western and southern parts of the country would open up new space for manufacturing units and make industry more competitive.
INDUSTRY BOOST
The impetus to ports and inland waterways would further streamline transport connectivities. The measures in the capital markets enable industry to access long-term funds for the sector as well. A key initiative to create more jobs has been taken in the form of measures for the MSME sector which is the seedbed of entrepreneurship.
Non-tax benefits will be extended to units that graduate from the SME space for three years, which should encourage their growth. SIDBI has been allocated additional funds for refinancing and factoring, while R&D support for MSME has also been enhanced.
Industry is also happy with the restraint shown in the matter of taxation. While revenue generation was imperative, the additional taxes on incomes over Rs 1 crore, and other surcharges are reasonable and well-balanced. We had hoped that Government would target increased revenues from widening of the tax base as well as unlocking funds tied up in tax litigation and in sick public sector units.
However, excise and service tax rates have been left untouched except for some tweaking of specific items. The capital markets have received a big boost which will encourage participation of overseas investors. The Budget rightly places emphasis on curtailing current account deficit through additional foreign funds, and various steps have been taken to simplify participation of FIIs in the sector.
The dedicated debt segment in stock exchanges would develop the debt market to align it with requirements of financial sector. The Budget could have announced specifics on GST which is undergoing the Parliamentary process. We hope the Bill would be speedily negotiated so that GST can meet its potential of adding more than 1 percentage point to GDP growth pace. Also, the Direct Taxes Code should be quickly introduced as mentioned by the Finance Minister.
In sum, the Budget provides the right architecture for reviving growth and investments for inclusive and sustained growth of the country and its people.
(Chandrajit Banerjee is Director General, CII)