Yashwant Sinha presented the Union Budget 2001-02 at a crucial time when the global economy is passing through a downturn and the Indian economy is also experiencing a slowdown. Expectations regarding the budget were, thus, feeble. Under such odds, surprising everyone, the finance minister presented a budget that again restarted the engines of economic reforms, which had come to a standstill. The budget has conceived powerful ways to bridge the increasing fiscal imbalance, increase capital inflows, remove infrastructure bottlenecks and reinforce investors’ confidence. All bold initiatives in the right direction. Both corporates and investors have been given a fresh lease of life. However, the exposures of Tehelka.com regarding the defence scam, on the political side, and the payments crisis followed by allegations of insider trading in the capital markets have made all the bold initiatives appear very cold. Swift and decisive action to redeem public confidence is the need of the hour.
This year’s budget (2001-02) presented by Yashwant Sinha offers a crème de la crème prospect for the future. Such a budget was much awaited by the people. Sinha, by some process of evolution appears to resolve the financial and economic problems. At a time when the economic growth was sluggish coupled with the global slowdown even the expectations were feeble. However, astounding everyone, Sinha presented a budget that not only gave a fresh boost to economic reforms but was also able to contain the fiscal deficit and accelerate economic growth. For all these efforts the finance minister obviously deserves applause. He deserves accolades for putting the economy on the path of second-generation reforms with a careful calibration. Probably, this is one of the best budgets engineered by Yashwant Sinha and the NDA in the past few years. The budget surely portrays a full picture of Sinha’s fiscal prudence. However, in many ways this budget is a continuation and consolidation of the past two years. Ravindra P Purohit, Economic Advisor, Hindustan Construction Company, feels, “The budget tactfully balances what is feasible in the short run with what is needed in the medium run. The finance minister has chosen to be pro-active and use his budget to make some real moves and throw up a challenge to the opposition.” It incorporates a fairly good dose of sound economics while balancing political, business and public interests. It has by and large met peoples’ expectations and even exceeded in some cases. First, it has not sought to raise more tax under the guise of calamity and instead removed most of the surcharge. This was indeed a great relief to everyone and particularly to the fixed income group. Second, it has attempted to rekindle growth through sector-specific measures, e.g. auto sector, food processing, textiles, etc. Admittedly, these measures are not dramatic, but nevertheless meet industry expectations. Third, it has proposed steps to create an enabling environment for investment revival. “Sharp reduction in interest rates, lowering of dividend tax, raising of FII investment limit to 49. |
