He has tried to create positive vibes by simplifying the direct tax structure, encouraging employment-driven and sensitive segments like sugar, food, textiles, SMEs introducing a base exemption in service tax and placating the stock markets with measures like classifying income from derivatives as non-speculative.
From a corporate perspective, the reduction in corporate tax will enhance competitiveness.
The cut in Customs duty levels is definitely a step in the right direction. And, from a manufacturing sector perspective, there is relief in input costs through duty reductions.
The Budget has also addressed the inverted duty structure, which imposed an unfair burden on raw material inputs as opposed to finished goods.
Further, the reduction of withholding tax for technical services from 20 to 10 per cent is a positive move.
For the power sector, the Budget talks about a Rs 1,100 crore (Rs 11 billion) investment in rural electrification to strengthen the 33/11 KV substations and the rural distribution network.
On the other hand, the Budget was silent on concrete power sector investments, a critical infrastructure sector.
Although the idea of an SPV for long-term financing of infrastructure projects in select sectors is a good move, we would have liked to see more focus on infrastructure investments in areas like power, airports, power, etc.
The finance minister has talked of an urban renewal focus but we would have liked him to go further in terms of concrete infrastructure development plans.
Also, there are no significant announcements on reduction of government expenditure and the Budget is quiet on areas like divestment and labour reforms.
Ravi Uppal is vice chairman and MD, ABB India.
