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The government’s finance Budget appears more like a roadmap and vision for the next five years. With three months of the current financial year already behind us and a lot of damage already done to the finances of the state, the government has rightfully shifted its focus on what it intends to do beyond the next nine months.
Quite appropriately, therefore, the finance minister in his presentation projects the fiscal deficit levels he wishes to achieve in 2015-16 and 2016-17. Just as apt is the mention of several infrastructure projects. While the FM has something to offer to every segment of the economy and social sectors, he seems to have largely given the go by to the manufacturing sector, treating it much like a girl everybody loves but no one wants to marry.
Though the government has announced a correction in the inverted tariff structure and investment allowance for new manufacturing investments, there was a clear need for more concrete sector specific measures, particularly for industries in domains like capital goods, consumer durables, automotive and steel. No schemes were proposed for stimulating their growth.
While the government has extend 80–IA tax exemption benefits to power generation plants, it needed to go further and work out a financial bailout plan for beleaguered power, steel and mining sector projects.
Further, to ensure their continued growth, the government could have proposed to set up a special financing arm for industrial/infrastructure projects with investments exceeding R500 crore. The stricken businesses could have been made eligible for long-term loans and equity financing.
Sadly, the finance minister did not announce any measure to restore the health of sick state electricity boards which are the biggest threat to the growth of the power industry. Although, it may be seen as a matter of detail, the finance minister could have proposed a time-bound plan to overcome acute coal shortages.
The finance minister cannot wish away the legacy of problems his government has inherited as they are bound to impede future investments in the infrastructure and manufacturing sectors. A majority of investors in the new projects are from among those who are suffering from the after effects of their projects running aground.
The euphoria at the end of the two-hour budget speech that proposed a series of dream projects was undeniable. Most of us were on a high as the finance minister made his concluding remarks. It is to be hoped now that