Tuesday, March 1, 2011

The Pause Budget

The Union Budget presented by Union Finance Minister Pranab Mukherjee in Parliament yesterday can best be described as an exercise in consolidation, hinting at some big stuff in 2012.

The raising of the tax bracket from Rs. 1.6 lakh to Rs. 1.8 lakh (for men) was a small gesture, allowing people to save Rs. 20,000 extra a year, but in real terms, it's not much given the current inflation rate. Furthermore, changes in excise duties together with inflation would mostly negate the measure.

The big announcements included the introduction of GST next year; the increased spending on Defense and Education; and the special package for the North Eastern states. The second one comes with the obvious footnote that any further requirements for defense would be met.

With the economic position of the country being sound apart from the huge problem of inflation, it was hoped that Pranab Mukherjee would look into that particular aspect. Sadly, he did not, or at least not in the depth that was hoped for. The bright side a significant growth in the agriculture sector (which comes out of the high inflation rate) as well as a decrease in the fiscal deficit.

Overall, Budget 2011 was not exceptional in any way and could have been better. But it gives some hope for a 'big one' in 2012.

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