Mar 03, 2011 04:42 PM IST | Source:

Analysis of budget 2011-2012: D&B

Dun & Bradstreet (D&B) has come out with its report on Union Budget 2011-12.

Dun & Bradstreet (D&B) has come out with its report on Union Budget 2011-12.

Union Budget 2011-12:

The Union Budget FY12 has been presented at a time when the Indian economy is heading towards a high growth trajectory, albeit certain challenges such as elevated inflation, high Current Account Deficit (CAD), and moderating growth of industrial production, which have surfaced in the recent past. At the current juncture, what was required from the Budget was to address the issue of inflation and support growth momentum, while maintaining the focus on fiscal consolidation and continuing ahead on the reform agenda. Increased allocation of planned resources towards infrastructure projects along with the proposals to direct foreign funds and private saving towards infrastructure sector will unlock much of the growth potential of the sector.

Although the continued thrust on infrastructure along with agriculture and education sectors is expected to provide significant impetus to economic growth in the medium-term, measures to control inflation in the immediate future were missing in the budget announcements. Having said that, the emphasis on addressing structural concerns such as weak supply chain linkages, and shortcomings in distribution and marketing systems of agriculture commodities is expected to provide long term solution to these issues, which have been contributing to high inflation in the past. Nonetheless, effective and timely implementation of proposed initiatives remains the key to tackle these long pending issues in the agricultural supply chain.

Even as the Budget FY12 reinforces the need for continuation of the reform agenda, it lacks major announcements on this front. While the emphasis of the budget on active consideration of a new fertiliser policy for urea, direct transfer of cash subsidy to BPL people for better delivery of kerosene, LPG and fertiliser, further liberalisation of the FDI policy, et al is definitely positive, how these proposals fare on the implementation front remains to be seen. Rescheduling the implementation of Direct Tax Code (DTC) and Goods and Service Tax (GST) by April 2012 does spell out some concerns on the governance front, but were much anticipated. The decision to propose the revised Companies Bill in the current parliamentary session and intention to introduce the National Food Security Bill (NFSB) during the course of this year are indeed welcome.

On the fiscal deficit front, the budgeted fiscal deficit of 4.6% for FY12, below the Finance Commission

Follow us on
Available On