NEWSLINKS
BUDGET 2000 LIVE!
BUDGET ON REDIFF
D&B BUDGET SPL
ECONOMIC SURVEY
RLY BUDGET
BUDGET: RUN-UP
BUDGET PROCESS
BUDGET HOTLINKS
Y2K BIZ FEATURES
INDIA & THE WTO
GOVT&ECONOMY
SPECIALS
INTERVIEWS
COMMENTARY
CREDIT POLICY
BUDGET 1999-2000
USEFUL INFO
ARCHIVES
SEARCH REDIFF

'There is nothing anti-industry in the Budget'

BUDGET 2000

Amal Ganguli

The Budget is hard on the revenue collection side, but not on the expenditure side. And it is difficult to see how it will increase GDP growth from 5.9 per cent to over 7 per cent.

It is a positive Budget. The actions taken are of long time benefit to the economy, to the country. The policy on disinvestment, on restructuring of companies, and the single rate of excise with the VAT to be introduced next year will have a major impact over a period of time.

The Sensex is already down by about 300 points. It may come down a bit more because the market was expecting many more benefits, particularly for the IT sector. The customs duty on some computer equipment has come down. But part of the tax exemption on exports has been withdrawn and will be fully withdrawn over five years.

The tax exemption on export profits has been in place for many years. It was bound to be reduced or removed sooner or later on considerations of collecting more tax. The IT industry has matured considerably. Insiders have been saying that they are prepared to contribute to the country's tax collection efforts. Since the withdrawal of tax exemption is applicable to all exports and is phased over five years, the industry should be able to absorb it.

The tax rates in India are still low compared to many other countries. An increase in the surcharge applies to taxable incomes of individuals over Rs 150,000 per year (effectively gross income of over Rs 250,000). The working class should not be affected, therefore.

Corporatisation of infrastructure service providers has been announced. Allocation to national highway funds has been increased. The outlay for power projects has been increased. Infrastructure projects have been approved for investment by charities.

There is special pleading in respect of a number of industries and if all of these were granted, the tax collection will go down substantially. The tea industry already has special provision related to replanting tea bushes etc to take care of its special nature.

I agree there does not seem to be much of a difference between the Congress Budget and the BJP Budget, as whoever is in power finds it difficult to take harsh measures.

There is nothing anti-industry in general in the Budget. Expectations about relief to the technology sector have not been fully met, and there is some withdrawal of the exemption of export profits which was expected. Based on fundamentals, there is no reason for a permanent fall in share values.

Amal Ganguli is Chief, Price WaterhouseCoopers India.

Budget on Rediff | Dun & Bradstreet Budget Special | The Run-up
Budget Process | Budget Hotlinks | NDA Government & Economy
Ministry of Finance: Economic Survey 1999-2000 | Budget 2000 document

Tell us what you think of this Budget 2000 coverage