Fast track Budget
01 March, 2005 | The Times of India
ShareMr. Kumar Mangalam Birla
The Times of India
1 March 2005
The Finance Minister has served yet another ace! The excellent Union Budget for 2005-06 will go a long way towards sustaining India's GDP growth rate at a higher plane of around 7-8 per cent per annum. The Budget also lives fully up to the goal of enhancing the human dimension of development. The Budget targets key 'quality of life' indicators - health, irrigation, drinking water and infrastructure.
At a broader level, the Budget is fully in tune with the vision of capitalizing on India's human potential and, thereby, making India a global economic force. The tiger could well be on the way to being uncaged!
The Budget also strikes while the iron is hot. As the FM has mentioned: "All the engines of the economy are running at nearly full speed". This was the right time to step on the accelerator. And the Budget does precisely that.
The FM has tried to give rural India a major push - through initiatives such as micro-irrigation; facilitating universal access to primary education; the establishment of mechanisms such as a National Rural Health Mission and a National Horticultural Mission; a push for rural housing; the promotion of micro-insurance; a significant step-up in credit flows to the rural sector; and, the setting up of a Backward Regions Growth Fund.
India's manufacturing sector also gets a shot in the arm. The peak customs duty rate (for non-agricultural products) has been lowered from 20 to 15 per cent, while the customs duty on capital goods has been brought under a 5-10 per cent band. Thus, the anomalies of an 'inverted' duty structure have been partially rectified. The reduction in the corporate tax rate is most welcome, as is the streamlining - and lowering - of personal taxes. The lower effective tax burden is, together with substantial rationalization of deductions, sure to promote tax-friendliness, greater compliance, and higher collections.
The Budget also seeks to address the problems of urban India. The seven largest mega-cities will get budgetary support to upgrade their infrastructure and initiatives will be taken to develop Mumbai as a regional financial hub. The vital role of urban India has got explicit recognition, and this is perhaps a first.
Just as important, the Budget signals that development is not a zero sum game. Both rural and urban India need to prosper; so do the farm sector and manufacturing; that greater tax friendliness can mean more revenues; and economic and social stimulus need not be at the cost of fiscal prudence.
(The writer is Chairman of the Aditya Birla Group)
Other publications with Mr. Kumar Mangalam Birla's views on India Budget 2005-06:
