The finance minister?s Budget for 2012 seems modest, but with a lot of pragmatic thoughts given to infrastructure and agriculture sectors. It focuses more on equitable support to the sectors which have been impacted by slow growth in the recent past. Focus on boosting core sectors such as infrastructure, power, aviation and agriculture is surely a positive move.
We welcome the government?s plan to start the National Mission on Food Processing this year and would actually like to see this take shape very soon. The current state of farming and wastage farmers face on their crops and fruits every year is a matter of grave concern. On the one hand, a lot needs to be done to grow processing of fruits in India, which currently stands at just 3% of the produce. On the other hand, the mission can greatly help in restoring the fast-dwindling large-sized farms. Worldwide, better technology and infrastructure have seen fruit processing to gather over 25% of farm produce. We hope the mission will help in improve the situation in India.
The hike in excise duty is bound to have an adverse impact on all sectors, specially the processed food market which is still trying to create a foothold in the Indian market. Most FMCG companies are not in a position to pass on the rising input prices. An excise hike will only worsen the situation for consumers and producers alike.
However, as usual, what will become critical to such missions is the speed and efficiency of implementation. The agricultural sector needs this immediately and any delay anymore will lose the significance of the project.
The proposed changes in direct taxes have not been very encouraging, except for a small relief in the income-tax slabs. Overall, hikes in excise and customs and the increased service tax will only result in lesser disposable incomes for the common man. However, it remains to be seen if the revenues generated from indirect taxes can really boost the core sectors of the Indian economy.
In many ways, this Budget was actually expected and does not come as a surprise.
(The writer is joint managing director & CMO, Parle Agro)