An honest attempt: Ajay Srinivasan

Three key themes stood out in the Budget. First, the view is that economic growth has bottomed out. The finance minister expects growth to pick from 6.9 per cent in FY12 to 7.6 per cent in FY13. He spoke of re-energising demand-driven growth, removing supply bottlenecks in infra, driving inclusive development and addressing black money and corruption.

Second, there were steps announced for fiscal consolidation. Service and excise taxes were raised from 10 to 12 per cent. A negative service tax list, which has exempted 17 services from the list, should provide the much-needed tax buoyancy. There was no change in the peak rate of the customs duty, though individual customs duty for certain items were cut. The fiscal deficit target of 5.1 per cent, though higher than the estimate of 4.6 per cent for last year, is more realistic.

The minister also laid out a path for consolidation in subsidies. These accounted for 2.3 per cent of GDP in FY12 and he is looking to reduce this ratio to two per cent in FY12. The drop in the subsidy share of the GDP will result in a net reduction of Rs 25,000 crore in subsidies in FY13. Finally, he opened doors to external financing and eased conditions for infra financing. ECBs have been allowed in low-cost housing, aviation and power finance.

Ajay Srinivasan
CEO, Financial Services,
Aditya Birla Group