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'It's Sinha's best Budget'

Anil Kumar Epur

For the first time, Union Finance Minister Yashwant Sinha seems very confident in four years. It is a very good Budget compared to the earlier three.

He has been able to focus and address major issues concerning the economy:

Infrastructure. Why is it all that initiatives have not taken off? He has addressed these issues by giving reasonable tax holidays and hopefully access to lower cost capital

Try and reduce the cost of capital for industry and general public, which will hopefully lead to greater investments and more industrial activity, in addition to greater consumer demand, with more disposable income available with consumers.

Making education more widely available not only for the primary level, but also facilitating financially constrained but capable students access to professional education by making loans feasible.

There has been a concerted thrust to free agriculture and the agri-sectors. This, in addition to greater access to lower cost capital, should invigorate these critical sectors.

The attempt to curtail expenditure and reduce surplus staff in the government is also welcome.

The attempt to liberalise labour markets while maintaining social security for labour is a long awaited requirement of industry, especially the manufacturing industry.

Reduction in surcharges is a further attempt to encourage compliance with reasonable tax rates and provide for greater disposable incomes, hopefully for investment in productive areas.

It was also heartening to note the drive to establish a mid- to long-term fiscal policy so that industries would have clarity on what to expect in the three- to seven-year timeframe.

This will help the industry plan fresh investments.

The last major advantage of the Budget has been to bring in many services into the tax net.

I would rate the budget 7.5 out of 10.

We are satisfied with reforms to a limited extent that the cost of capital will be reduced, banks have been given greater freedom, BRSB has been abolished and more funds have been made available to financial institutions as well as the facility to raise interest-free bonds for infrastructure.

The lowering of tax rates by removing surcharges and reducing dividend tax should again give a positive thrust to financial markets and institutions.

The major concentration areas of the Budget are:
Facilitating infrastructure development
Reducing cost of capital
Reducing surplus manpower
Simplification of procedures and movement towards VAT
Better compliance with taxation due to more reasonable rates and
Prevent leakages in taxation

Given that the Reserve Bank of India is also lowering its prime rate and there is a belief the CRR will also be lowered, this reduction of interest rates should facilitate availability of funds with institutions and thus make them available to firms having good business plans.

Banks will be much more selective on the feasibility of business plans and that will be the criteria for making funds available.

Banks will also have more freedom to operate, they will have a lower cost of capital and they will be free to recruit as they seem fit. Hopefully, banks that do a good job in these areas will be more successful.

In the mid- to long-term, the common man will benefit as the economy will tend to lower cost, which will have consequential benefits to all. Hopefully, people will also have less procedural problems in day-to-day lives.

We also hope that economics and politics will be separated to a great extent and thus the ordinary citizen will not have to bear the cross of political decisions that are bad economics.

Non-resident Indians have been happy so far and Indians also have had the feeling that Indian investors are always on par with the NRI.

Anil Kumar Epur is chairman, southern region, CII

Budget 2001

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