Nothing magical about policy decisions on Feb 28

Updated: Mar 1 2006, 05:36am hrs
The hype and sensation around the budget is pass. At a time when tax rates were amongst the highest in the world and business practiced around tariff barriers and industrial licensing-the budget was in fact the mantra for business.

Today it has lost its significance in a relative sense and besides there is nothing magical about policy pronouncements on Feb 28!.

This years budget is neither Red, Orange nor Green - it is almost faun. It is business as usual. Notwithstanding this, it is surprising that the FM has continued with FBT, increased MAT from 7.5% to 10% and service tax from 10 to 12%.

If FBT is the new buzz word then how about forced business tax. Retaining FBT viz superannuation will discourage savings for retirement and could be inflationary with preference to hold on to cash. This already has been seen. If the country can achieve 8.1% GDP growth - moving to 10%, imagine what the outcome would be with superlative infrastructure.

Conversely though, 10 (23G) has been abolished- this will affect investments in infrastructure. I cannot understand the rationale, for e.g. for not extending this benefit to the healthcare industry and power, roads and the like. Fiscal incentives have transformed and shaped trends in the US - for e.g. investments in real estate were the key driver in the transformation of Florida.

All in all, the FM should be congratulated for bringing down the budget deficit to 3.1% of GDP and position budget day to be a near regular day in our business lives.

The writer is Chairman, Max India