Budget Analysis: FM did splendid job, no heavy tax dose, says Ashwani Kumar

In his Budget speech, Finance Minister P Chidambaram today said announced his intention to widen the tax base. Ashwani Kumar, Law Minister believes the FM has laid a strong edifice and a foundation for consolidating the Indian for the future.

The most important part according to Ashwani Kumar was that the FM has acknowledged frontally that it is critically important to kick start manufacturing in India. He told CNBC-TV18 that without a heavy dose of taxation FM has done a splendid job. Below is the verbatim transcript of his interview to CNBC-TV18 Q: The finance minister said a lot about presenting a non-adversarial stable tax regime, there was no mention on how government hopes to address the retrospective amendment directed to section 9. There was no mention of that and there has been a degree of disappointment on account of the silence on that? A: What has happened is a fait accompli. The fact remains that even when the amendments were made, it was stated that these were by way of clarification. However, the fact also remains that there is enough elbowroom to ensure that judicial verdicts will not be nullified retrospectively. That has been the stated position of the government but as far as a particular matter is concerned, it is never the practice of the finance minister to make that as a focal point in a Budget speech. Q: There are question marks on whether he has been able to press enough levers to jumpstart growth, to jump start investment, the capex cycle. There doesn't seem to be enough evidence to suggest that he has been able to do that? A: To be fair to the finance minister, his Budget proposal should be judged in the context of what was possible today. That too, in the context of economic slowdown, the need to contain fiscal deficit and the need to contain revenue deficit. I think he has done a splendid job. The most important thing that brings very true to every informed citizen’s mind and year is the fact that he has stuck to his promise. The promise, of ensuring fiscal prudence by ensuring 4.8 percent fiscal deficit and 3.3 percent revenue deficit in the next year. I believe he has laid a strong edifice and a strong foundation for consolidating the Indian for the future. However, as far as boosting investment is concerned, 15 percent investment allowance for projects over Rs 100 crore is quite a big gesture. I think a very focus pressure on exports is an extremely and push to electronic industry in electronic manufacturing is a big gesture. Textiles and leather industry are again a gesture in terms of export in potential. He has stated repeatedly that these announcements will have to be carried, when on March 31 you have the import-export policy. One will see a very major thrust on promoting exports. The most important part is he has acknowledged frontally that it is critically important to kick start manufacturing in India. Manufacturing is what will create jobs and for that he has set-aside money for skills development. At the same time he has not neglected the social sectors, 80,000 to rural development, 67,000 to health, 27,000 to education. I think all in all, without a heavy dose of taxation he has done a splendid job.