The reiteration of the government to GST (goods and services tax ) is welcome. The finance minister also did well to commit that the financial sector reforms will be taken to their logical conclusion during this session of the Parliament, including the introduction of the Additional Banking Licences to corporates as well as the Companies Bill. The proposal to permit FDI in mutual funds is a big ticket reform and should positively address the decline in the growth of FDI in the recent past.
The Budget is purposeful and pragmatic, considering that the Finance Minister had to manage fiscal challenges, slowing GDP growth, inflation and an uncertain global economic environment.
His service tax initiatives signal a move towards a uniform GST, while contributing to government revenues. The increase in excise duty will hurt automobiles, at a time when industry is in the midst of a slowdown due to the combined effect of high interest rates and high fuel prices. The focus on rural growth and infrastructure, along with tax waiver for investment in skill development, are positive initiatives.