After much constitutional hair splitting over the title, whether it is an Interim Budget or a Vote on Account, and also over whether it is commencement of the first session in a new year, or continuation of the winter session which was adjourned sine die in December last, the Speaker ruled that the difference between an Interim Budget and a Vote on Account was more of semantics, and must be ignored. As for the issue of whether it is the first session in a new year, he held that it was second part of the winter session, the new fiscal year would commence only from April 1. Thank God, viewers like us heaved a sign of relief that Interim Budget could at last be introduced by finance minister Jaswant Singh.

Let me now turn to the substance of Interim Budget. I welcome it wholeheartedly, not that it does not contain shortcomings, but then there is no budget that is perfect in all respect. Both the finance minister’s speech, and the Finance Bill showed the government’s unwavering determination to steer the Indian Economy on the fast growth track, so that India can emerge as a global super power.

Particularly heartening for me is the finance minister’s assertion that fiscal deficit has been contained at 4.8 per cent of GDP in 2003-04, and will be further curtailed to 4.4 per cent next year. I expect this fact to lead to a higher global sovereign rating of India, resulting in a greater inflow of capital, including FDI at substantially lower rates of interest. However, I cannot help expressing my concern that the high level of revenue deficit of 3.6 per cent in 2003-04 and the projected rate 2.9 per cent next year is too high and alarming.

There are other salutary features in the budget. The finance minister has deftly targeted many soft spots for extending relief - not through the conventional way of subsidies, but through an innovative fund structure which is bound to bring in the much-needed regulatory control and financial discipline.

Many such budgetary measures designed to promote animal husbandry, tribal development, and agriculture in this genre include :

Farm funds to extend loans @ of 200 BPS below PLR

The setting up of National Cattle Development Board.

ATM compatible Kissan Credit Cards to farmers by March 31, 2004.

Special fiscal incentive packages to the tea and sugar industries.

Reduction in crop loan at rates below 9 per cent.

Review of Desert Development Programme.

Fresh funds for Indira Gandhi Canal in Rajasthan and Narmada Canal in Gujarat.

And Additional Rs. 15,000 crores for strengthening the cooperative sector One of the biggest beneficiaries of the Budget will be the power sector, as the shifting of the sunset clause from 2007 to 2012 is bound to give a powerful growth thrust to the sector. Adding to this is the extension of income tax exemption benefits upto 2012.

I visualise that this measure will help revive the Dabhol Power Project, which has been lying idle for many years. I also welcome the announcement of tax benefits to multinational BPOs operating in India. But I do not see the logic why the benefit has not been extended to domestic BPO activities to support employment generation. While opening up to the world it is imperative that we build muscles of our domestic sector.

Another major area of fiscal reforms attempted in the budget is the proposed sharp reduction of 50 per cent in stamp duty rates. I am sure it will only lead to greater compliance by tax-payers and increase revenues. This should also serve as a green signal to the States to take similar action.

The measures for switching over to digital framework, enabling e-filing and e-processing of tax returns in respect of income tax, service tax, excise and custom duties will bring in transparency, simplicity and accountability to tax administration. It will also reduce tax evasion and corruption by minimising the scope for interface between tax-payers and officials.

The budget has introduced measures to strengthen the IDBI for enabling it to play a more effective role in industrial development. Similarly, it has many provisions to augment infrastructural investment by LIC, SBI and IDFC. The creation of Lok Nayak Jaya Prakash Fund for providing finance to sick units, and SMEs is yet another commendable step.

The budget has also taken sector-specific measures to help the automobile, shipping and capital goods industries.

A major area of my concern in the Budget is the proposal to merge a large portion of Dearness Allowance with Basic Pay of employees. This step is bound to set the clock back, and lead to uncontrollable spurt in government’s non-plan expenditure. It will also eventually cast very heavy financial burden on the corporates by increasing their payout to workers, affecting their international competitiveness. The measure will also politically force the States - whose finances are already in a shambles - to follow suit.

The author is President, Indian Merchants’ Chamber