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'Privatisation should move forward after BALCO'

Abhishek Dalmia

I am a perpetual bull, hence my opinion will suffer that bias. Having said that, I think the FM has announced certain measures which augur well for the market in the near term. The most important announcement was the unexpected withdrawal of surcharge, which should help investor confidence. This combined with a rate cut should help the cause of the markets. Finally, the market, I think, had discounted all the bad news prior to the Budget so most announcements were taken positively.

The Budget is looking at three critical initiatives:

1. Initiatives on education will give impetus to our service sector in the years to come.

2. Initiatives on widening the tax base will improve collections despite lower tax rates.

3. Most importantly, the fiscal deficit target has been achieved. This is probably unheard of in recent times. All these are significant initiatives which will serve the country well, going forward.

Finally, I think privatisation should move forward after BALCO. We should see some more big-ticket privatisations in the next fiscal. This again would set the tone for fiscal fitness.

The intention (increasing the duty on second hand cars to 105% and reducing the excise duty of new cars by 32%) is clearly to protect the automobile industry from dumping. In the more developed markets, people change their cars every 3, 4 years. These cars are still in very good condition but have a very low resale value in those countries.

If a country like ours does not have tariff barriers such as these, those cars could find their way into our market and the domestic indutry could suffer. Mr Jac Nasser, CEO of Ford, USA, had recently warned the Indian government against allowing the import of second hand cars for this very reason.

Abhishek Dalmia is director, Renaissance Estates

Budget 2001

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