1. Budget 2016 top view: Infra cess on cars hard to justify

Budget 2016 top view: Infra cess on cars hard to justify

The Budget mostly has all positives. The biggest perhaps is the FM keeping the fiscal deficit target for 2016-17 at 3.5%, despite many calls for relaxing...

By: | Published: March 1, 2016 2:47 AM

The Budget mostly has all positives. The biggest perhaps is the FM keeping the fiscal deficit target for 2016-17 at 3.5%, despite many calls for relaxing this in the interest of higher growth. However, merely providing more money to any sector does not ensure higher growth, or better services. The ability to spend that money efficiently, in a manner that ensures that the work is done according to schedule without cost overruns and is of good quality, is more important. Regrettably, that cannot be assumed in the context of all past experience and hence the FM’s prudent approach is absolutely correct.

Greater emphasis on improving rural incomes to the extent of doubling them in five years and improving rural infrastructure are well thought out. The proposals in the infrastructure area are good as it is generally agreed that the trigger to start the investment cycle has to come from government spending on basic infrastructure construction. Proposed changes in the Motor Vehicles Act to facilitate passenger movement are welcome, but why not extend them to the movement of goods also? That would help make manufacturing more competitive.

Improving the quality of life of those below the poverty line is essential and the steps proposed by the FM are welcome. The proposals for strengthening PSBs are good, though there are doubts whether Rs 25,000 crore would be adequate. More important is how such situations can be prevented in the future. The disinvestment policy needs to be reviewed. Larger funds, if available, could be used for infrastructure and social services. Sale of government undertakings could realise large amounts of money. Implementation of the announced reduction of corporate tax to 25% seems to have moved too slowly this year. Finally, the infra cess on cars is hard to justify. The industry is struggling to maintain some growth. It has now to invest to ensure that Euro 6 standards are implemented by 2020. As per the IIT Kanpur study, cars contribute only 2% of the PM 2.5 load in Delhi. Cars are not the cause of poor air quality; they create large number of jobs. Is it correct to load the industry with this cess at this point of time?

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