1997: Dream, 2013: Wake-up
The last full Budget of the UPA government presented Thursday began repairing an economy that has hurtled from a heady 9 per cent-plus growth rate to an abysmal 5 per cent, setting an austere tone through expenditure compression and some additional taxation.
A far cry from the “dream budget” of 1997, Finance Minister P Chidambaram’s efforts were more in the nature of a wake-up call that the economy cannot operate in the business-as-usual mode any longer.
“We took a dose of bitter medicine,” he said, referring to efforts that kept the fiscal deficit for 2012-13 at 5.2 per cent and set a stiff target of 4.8 per cent for next year.
The effort was acknowledged later in the day with rating agency Standard & Poor’s affirming it will not downgrade India to a junk status as an investment destination. It said the Budget is in line with the medium-term fiscal consolidation plan and the sovereign ratings will continue “unaffected”.
Fitch too said the Budget was encouraging despite a less than expected reduction in the subsidy burden that has crippled fiscal space of the government to promote growth.
Chidambaram’s eighth budget has eschewed extravagant pre-election promises, sticking to tax and non-tax measures for the rich and the middle-class that promotes savings and investment while trying to make realistic allocations for the poor.
The 15 per cent investment allowance for projects of over Rs 100 crore for the corporate sector was matched by a Rs 1 lakh savings offset for first time home loans and plans for
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