Home > Money > Budget > Budget News & Analysis MARCH 1, 2002 | 12:55 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
 



'The Budget has not done enough'

N Kumar

The Budget has good news for investments and money outside the country, but no special incentive for the software sector otherwise. Foreign Institutional Investment has been liberalised.

I don't think computers will become cheaper. With the postponemnt of the zero duty regime till 2005, prices will become firmer. It is a difficult Budget except for the refief in perks and housing. Although the Budget is average, it must be viewed in a political and economic sensitive environment.

The effect on the computer industry will be neutral. There is nothing negative, but definitely nothing positive too. As far as agriculture is concerned, I think the FM has spent considerable time and effort in building the only positive feature of last year's GDP. He has taken many useful steps and will definitely help alleviate probelms of the small farmers.

I think NABARD and SIDBI have been considered for capital gains tax exemption. As far as relief in perks and housing for salaried class are concerned, I think up to 100,000 perks are exempted for the current year and in future, the company can pay.

About the elecom industry, it will be positive. More spending on fibre optics etc. The FII invetsment relaxation also will help. while income tax (service tax) will be there. Cyber cafes and technologies like VOIP will grow independent of budget.

I think second grade scrap steel has become costlier as duties have been increased but we need to look at the details.

One sector which the FM has talked about positively is the Non Resident Indian. Full convertibility of deposits is positive. And, it shows the confidence of the FM in the Indian rupee.

With housing finance, he expects 35 per cent growth over Rs 263 billion (28 per cent growth in the previosu year). This year, with securitasation and mortgage credit gurantee scheme, I feel interest will go down. And, I expect a spurt as the FM has anticipated.

The Budget will hurt the middle class due to the income tax increase, the dividend tax and also increase in the price of kerosene and LPG. It is cautious and a little disappointing. Has no special growth impetus.

While the reduction of ceiling rate in customs duty from 35 per cent to 30 per cent is in line with our plan to go to world rates, the lack of supporting infrastructure and high cost of transaction in our country needs to be looked at. Industry wants to be competetive and therefore, does not mind reduction in duty, but unless the input side also keeps in track, it will be unfair to the Indian industry.

While manufacturing will not see any growth and services sector is not helped much by the Budget, only agriculture and infrastructure will see positive growth due to the Budget. The rest will have to wait for world economy to recover and also the Indian demand. Therefore, the Budget I believe has not done enough.

N Kumar is vice chairman, Sanmar group; chairman, Indchem and past president, Confederation of Indian Industry.

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.