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FM has tried to balance Infrastructure Development and Consumption

Posted on 29 Feb by Sanjeev Ranjan, Managing Director, International Copper Association India

The budget this time has made a very strong case for improving the Global Competitiveness of India by focusing on infrastructure, ease of doing business by bringing in regulatory reforms to cut bureaucracy and improve existing taxation norms and help to generate jobs. It is a good budget from the Government of India (GOI) which lays great emphasis on Agrarian / Rural Economy. The crisis under which the rural sector finds itself gets a very comprehensive coverage in the budget. FM has tried to balance between infrastructure development and consumption with a smattering of tax reforms. From the industry perspective, I feel that it’s neutral. I do hold a belief that the annual budget exercise over the years showcases the government intent and its desire on what it wants to do. This time it does clearly look like the focus is on rural sector.

Having said that I am slightly disappointed that issues on real estate sector has not been directly addressed. Government views on affordable housing were known and it has been reinforced with the different measures. Rs 50,000/- extra benefit for 1st time buyers of houses upto Rs 50 lakhs, HRA ceiling has been increased from Rs 24,000/yr to Rs 60,000/yr are welcome moves but we all know that this might not be a major boost for the four metros that has a huge inventory of houses. It will be sometime before this sector sees a leg up which it very much needs.
For middle income group I believe more could have been done – with new cess on account of agriculture (Swach Bharat Cess already exists) on all services, introduction of infra cess on cars will all go to increase the prices of various services and commodities like clothes, food, telephone and cars (1 - 4%).

There is very little to cheer for them. I believe ours is a consumption driven economy and by putting more money in the hands of the people we could have seen greater economic activity.
Still we are optimistic that the state government will take a cue from the central budget and do much more to give a filip to industry and the large middle class.


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