Let me begin by saying that on an overall basis it was a very good Budget. Populist? Yes, but very balanced and one with a productive path towards growth.
The FM has managed to maintain the fiscal deficit at 5.2%, which is even lower than the target of 5.3% he set out. This is very important for multiple reasons, including India not getting downgraded by global ratings agencies, which is very critical for us right now. Next, he touched upon a lot of critical sectors that need growth like infrastructure, agriculture, the more disadvantaged section of the society. He spoke about fiscal consolidation, increasing rates of banking and insurance, made insurance policy simpler by using KYC of banks. All these point towards a well-planned growth path.
However, I must say my first worry is the cut in plan expenditure over unplanned expenditure, I wished it was the other way round. Secondly, in the wake of tough economic environment, he has put surcharges on individuals and corporations, asking them to contribute in these tough times. Now this is fine and understandable as long as it remains for just this one year, but what is worrisome is that historically there have been charges that have been introduced for one year but have stayed on, some of course lapsed within the stipulated time.
Coming to the quantum of this surcharge, it is higher than what was anticipated. We had expected a surcharge of 1-5% but it was raised to 10%. I again reiterate that this is fine as a short-term measure, but for the long term a completely different model needs to be put in place.
Measures to encourage housing, interest subvention and higher tax breaks for lower middle class housing will go a long way in providing affordable housing and give a fillip to lower middle class housing. For the industry, he has brought investment laws that we have been asking for a long time. For investment of over R100 crore over 2-3 years, you get an additional investment allowance in addition to depreciation.
Coming specifically to the auto industry, I must say the rise in excise duty on SUVs was a bit of a surprise for the industry. He has, however, raised it for the more expensive vehicles. These kinds of things are often triggers as they scare people off. As far as SUVs are considered, it is a fast-growing segment generating employment and helping the rest of the sector offset the sluggishness.
