BUDGET 1999-2000
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A Band-Aid Budget!

Habil Khorakiwala

For the first time, the government has recognised the pharmaceutical industry as a modern-day industry. From that point of view, the policy announcements made have not come a day earlier. In fact, they should have happened two years ago.

But as there are no specific measures announced by the finance minister, I don't see this Budget boosting the economy in anyway. There are only a few positive aspects; one of this is that the measures taken in the Budget will boost the capital markets. Secondly, the Budget will help companies to restructure themselves.

We were expecting the sops given to the pharmaceutical industry, especially with regard to the dilution and dismantling of the Drug Price Control Order and the introduction of a drug policy on research and development. But no specifics have been mentioned. So one really does not know what is included and what is not.

We were making a number of suggestions to the government on the R&D front. I do not know which one they have accepted. We want to create a fund for the industry on the same lines as the sales tax loans. Just like the way the government sanctions excise duties loans, we want them to grant R&D loans.

As this will constitute deferred revenue for the government, the repayment period can be extended to ten years or so. Its only then that R&D results will start showing. We also requested procedural simplification in a lot of cases.

We were also expecting the finance minister to be very specific when announcing the R&D policy statement. But nothing really has come and from that point of view, the Budget is a disappointment. This Budget is long on generalities and short on specifics.

The Budget will definitely lead to inflation. One reason is across-the-board increase in custom duties. Although excise duty too has been rationalised, there is no reduction. The government has not taken stern steps to reduce either its own expenditure or inflation. So all these extra-budgetary allocation including the Rs 100 billion from divestment of PSUs plus the anticipated growth of the economy which will come, will go towards non-productive areas.

The government has not increased the plan expenditure which could have definitely kickstarted the economy. I would call this a Band-Aid Budget -- it's a Budget that lacks an economic soul as well as direction. Nice words without any depth.

Habil Khorakiwala is chairman and managing director, Wockhardt Limited

Budget 1999-2000

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