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The Rediff Budget Jury/Gopichand P Hinduja

'The Budget is geared towards continued reform'

BUDGET 2000

In my opinion, the Budget is geared towards continued reform. The Budget is pro-IT and telecom, which the government has rightly identified as the two sectors that are the backbone of the knowledge-based economy.

However, it has not sufficiently addressed the infrastructure sector, particularly the role to be played by the private sector. The country's ability to provide for further growth is limited by poor infrastructure and inefficiencies.

On first review, the Budget does not appear to have done anything for non-resident Indians, particularly since their investment is required by the country's infrastructure sector. No doubt, there is encouragement for FIIs and foreign investors (in which category I too fall).

Prices of computers and infotech-related gadgets will drop because of reduction in excise duty while software exports will probably rise by 50 per cent despite the tax on export earnings.

The excise rationalisation makes sense to a certain extent, but it will increase excise on a number of items from eight per cent to 16 per cent.

It is true that China has attracted $ 290.6 billion in the last decade. India, with its advantage of a large English-speaking population, a tradition of common law, and a British-style civil service attracted only $14.75 billion. But this may be because China did not have a private enterprise that grew in a protected economy and opposed the entry of foreign investors into the country, whereas India does.

A recession in the economy will affect all sectors, but in greater or lesser proportions in each sector. We are not opposed to the imposition of tax on the infotech sector, where high growth rates have been predicted.

The government does not seem to realise the importance of NRIs. However, in recent years, there has been a great improvement in the avenues opened for NRI investment. As you are aware, the IndusInd organisation, which represents NRIs, has done a lot to boost their status within the government.

Unfortunately, the Budget lacks growth stimulus. Also, it has not addressed the fiscal deficit or reduction of subsidies.

Gopichand P Hinduja is president of the London-based Hinduja Group

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