Overall, it is a good budget, aiming for a 10% GDP growth, which is quite commendable. Its focus on infrastructure development for the country is in the right direction and is laudable. Implementation of planned infrastructure projects in a time-bound manner would certainly help accelerate further growth.
Reduction in peak custom duties from 15% to 12.5% will bring down costs on imported raw materials, which is a positive sign for all.
There has been no tinkering of tax rates, which is again good. Coming to the specifics of the pharma industry, we find very little in it for us.
There was no mention of the extension of weighted deduction on R&D. Last years budget announced that it was applicable till 2007 and we hope this good practice will continue after 2007 too. With the patent regime on in India, its time the government encouraged innovation and supported the industry by announcing grants for research & development. In the past only announcements have been made but no action has happened on the special fund for R&D. We hoped for incentives to set up R&D centers in India.
This would have created numerous spin-off benefits to help create a base for innovation in India. But Budget 2006-07 has been disappointingly silent on this aspect. Annual budgets from the point of view of citizens - both corporate and individual - are increasingly becoming predictable and consequently a non-event.
With most of the direct and indirect tax rationalisation already achieved - budgets on a broader level can give direction and indication of the growth, inflation and interest rate movement.
What would be more interesting is the non-budget programmes/initiatives in the areas of infrastructure, further liberalisation and development activities which will lead to further growth and job creation both in rural and urban areas.
The writer is Chairman, Dr Reddys Labs