Considering the challenges posed by the difficult macro-economic scenario in 2011-12, the Budget is pragmatic. It has targeted domestic demand-driven economic growth, reviving private investment, alleviating supply-side constraints in key sectors and governance. The commitment to reducing the fiscal deficit is encouraging, along with the stated intention to move rapidly on pending reform Bills. With the reduction in the fiscal deficit from 5.9 per cent to 5.1 per cent, more space would be available for private sector investments.
Provisions such as cutting subsidies to 1.7 per cent of the gross domestic product in the coming three years and the initiative for direct transfer of subsidies are imperative to improving government finances. The focus on infrastructure development through measures such as tax-free bonds of up to Rs 60,000 crore, expanding the list of sectors eligible for viability gap funding and raising the external commercial borrowing limit for key infrastructure sectors are welcome. Special provisions for sectors such as power, roads & highways and aviation would help bridge the gaps faster. However, CII is concerned that raising the excise duty and service tax from 10 to 12 per cent would exert pressure on prices.
Chandrajit Banerjee
Director General,
Confederation of Indian Industry
