Overall economic growth has averaged 8.8% in the last four years. GDP growth rate for the year is estimated at 8.7% with services leading the growth at 10.7% and manufacturing growing by 9.4%. Tax revenues have been extremely buoyant, increasing to 12.5% of GDP, fiscal deficit is down to 2.5% next year with revenue deficit at 1% of GDP. The economy is on a roll. This has allowed the Finance Minister to make significant investments in agriculture, education and social sectors. However, we see inadequate allocation for higher education once again.

In terms of direct taxes the Finance Minister has given significant relief. This will help corporate India reduce wage inflation. Excise duty has been reduced across the board and coupled with the reduction in direct taxes, consumption and production should increase significantly, boosting growth.

The budget has not been positive for the IT industry. Smaller companies should have been given tax relief in this budget to counter the impact of a sharply appreciated rupee. The increase in excise duty for packaged software will lead to increased piracy

Rating : Not Rated