Budget Reactions: FM balances GDP growth & fiscal deficit, says Uflex

By RK Jain - Group President (Corporate Finance & Accounts), Uflex Ltd

The Honorable Finance Minister categorically stated in his Budget speech that current F.Y. 2011-12 has been a disappointing year in respect of economic achievements and made a sincere and honest admission of the fact that GDP growth and fiscal deficit has slipped to 6.9% and 5.9% respectively due to unfavourable local, national and international conditions but they are expected to improve in future.

Finance Minister has adopted a very modest approach in preparing the Budget for the FY 2012-13 and largely focused on establishing a balancing act between GDP growth and fiscal deficit to the respective levels of 7.6% and 5.1% which seems to be more realistic targets to be achieved.

The Budget provides impetus to certain deficit sectors such as infrastructure, power, aviation, low cost housing etc. which are very critical to higher economic growth in future.

While no major direct benefits have been given to the public at large except small soaps in the form of exemption / rationalization of personal taxation limits but public will desire large indirect benefits with better and efficient management of economy by the political leaders and government managers.

He has also announced  long pending matter of GST introduction from August, 2012 and rationalized the Service Tax  & Excise Duty rates to bring parity.  These will bring uniformity in tax structure on all India basis which will bring healthy competition among the domestic industry irrespective of their locations within India.

It has also given positive signals for reconsideration of contagious matters of FDI in civil aviation and multibrand retails.  If decided favourable post Budget, the same will accelerate growth of many sectors in the economy.

Finance Minister has increased / reduced the Custom Duty / Excise Duty rates on certain goods appropriately as a dual sword to protect the domestic industry from undue competition and also to mop up higher resources for meeting growth needs and contain fiscal deficits.