The finance minister has announced positive measures for sectors such as housing and constructions, pharma, consumer electronics and FMCG which are welcome but insufficient for overall growth of the economy. In fact, additional duties, whether by way of corporate taxes or personal taxation, will reduce income which in turn will affect demand.

However, the most important positive aspect of the Budget is the rationalisation and simplification of excise duties. The restorations of 100 per cent Modvat credit is good news. Provisions regarding mergers and acquisitions will help companies undertakestrategic planning. Under the present competitive environment, industries need to restructure their businesses which may call for mergers and demergers. By making these activities tax-neutral, recasts will be easier. Apart from these there are other areas such as entertainment and software which will benefit.

However, unless there is much larger investment in the infrastructure sector economic revival will be difficult. Larger provision of public sector investment in infrastructure sector and selective reduction in excise duties specially for steel and cement could have helped revive these industries.Additional investments in different sectors are needed to create demand but this has not been done. More schemes, perceived as subsidies, have been announced to promote certain sectors and this has been a major problem.The announcement to do away with away with procedural hassles for foreign direct investment and open up more industries for overseas investment is good news. Apart from this, monitoring actualreceipt of FDIs as against the approvals is a good measure. However, investment would come only if there is confidence in the economy and how that happens remains to be seen. If the economy is buoyant, foreign investment will come automatically.

In some areas of infrastructure such as power, telecommunication and ports, FDI is possible but not for areas like roads as there is little foreign exchange potential in these areas.

There is no immediate sign for exports to grow except for areas with greater potential like software. For conventional exports there is nothing much except for some credit in the form of forex pre-shipment and post-shipment credit facility. Conventional exports have also been hit by the south east Asian crisis.

--As told to Vandana Saxena