- Union Budget 2011 was a balanced act between problems v/s growth. FM managed to deliver a pragmatic budget catering to both the area of concerns
The finance minister presented the Union budget 2011 amid expectations of announcements on fiscal consolidation to rein in fiscal deficit, roadmap for implementation of Goods and Service Tax (GST) and rationalization of taxes on both corporate as well as personal tax levels. It was quite evident, even before the finance minister rose to deliver his budget speech; he had his work cut out considering factors such as the challenging economic situation with the global crude oil prices nearing $100 a barrel, high inflation driven by supply bottlenecks and high current account deficit. Besides, issues like rising tensions in Middle East, various corruption scandals faced by the government and impending state elections were expected to impact the chances of bringing about various policy announcements.
Considering all these factors, the finance minister managed to do a reasonably good job of presenting a balanced budget that not only touched upon most of the serious issues but also focused on the growth and reforms. The FM has pegged the growth for FY 12 at around 9%. Moreover, while on the one hand there are definite moves on the implementation of Goods & Service Tax (GST Bill to be introduced in the current session) and Direct Tax Code (DTC to be implemented from April 1, 2012); on the other hand fiscal deficit has been pegged at 4.6%. Though there are a lot of sceptics who would wonder as to how the finance minister is going to achieve this without reducing spending, it should soothe the nerves of the stock market for the time being. Besides, investments from foreign investors, who meet KYC (Know Your Customer) norms, into equity schemes of mutual funds would provide the much needed impetus to the MF industry as well as healthy inflows into the stock markets over the next few years. Another positive has been the expectation of average inflation being lower than 2010-11.
From a common man