Nothing more could be done than what finance minister has done
Mar 01 2013
As rightly told by the finance minister the immediate goal is higher growth leading to inclusive and sustainable development. That is the mool mantra. The purpose of the budget and job of the finance minister is to create the economic space and find the resources to achieve the socio-economic objectives. At present, the economic space is constrained because of a high fiscal deficit; reliance on foreign inflows to finance the current account deficit, lower savings and lower investment, a tight monetary policy to contain inflation and strong external headwinds. Hence, the task was not simple and it was double-edged. With the prevailing economic scenario, he constrained to increase revenues. By imposing taxes then it will have negative impact on the economy, which is already stressed. And he cannot reduce taxes since lot is going to be spent on development activities to stimulate the economy.
Even though he could not provide many measures to stimulate the economy, at least, continuing the tax and fiscal policies will not do any greater damage to the present state of affairs. Whatever increase in taxes has been proposed by way of levying surcharge will be offset by the companies taking advantage of investment allowances provided in the budget. He mentioned revival of investment in the industrial sector, especially manufacturing, it is a key challenge, because many projects are stalled, as they are unable to clear regulatory hurdles. The cabinet committee on investment has been set up to monitor investment proposals as well as projects under implementation, including stalled projects, and guide decision-making in order to remove bottlenecks and quicken the pace of implementation.
Many analysts and financial experts comment that this budget is a non-event, since it does not contain any stimulation to kickstart the economy, but I feel nothing can be done more than what he has done.