Low on expectations; FM delivers on fiscal consolidation: ASSOCHAM President, Mr Rana Kapoor

ASSOCHAM President Mr. Rana Kapoor said, “Despite being low on expectations in an election year, Finance Minister P Chidambaram’s Interim Budget has given a pleasant surprise at least partly to the manufacturing sector which has been bleeding. The excise duty cut on automobiles and capital goods will provide a much-needed relief to these sectors”. However, the industry would expect a much larger package from the new government to revive the manufacturing sector when a regular budget is presented some times in July. More importantly, the Finance Minister deserves to be complimented since he is leaving behind the government treasury in a sound shape with the result that the overall macro picture of the Indian economy today looks far better than it was about eight months back, says the ASSOCHAM Chief. The external sector today is far more stable with exports picking up and the current account deficit capped at USD 45 billion, a little   less than half the worrisome level of USD 88 billion in 2012-13. The fiscal deficit has also been contained at 4.6 per cent, though it has been achieved by a big cut in the Plan expenditure.  But he did not have many choices either. However, the ASSOCHAM feels that there is an imperative need to cap the non-Plan expenditure of the Central Government. The Non-Plan expenditure of over Rs 12 lakh crore gives an impression of a fat government which needs to reduce its size so that more resources are left for development. The Finance Minister also needs a pat for not yielding to pressures of populism, which is generally evident in an election year. However, a ballooning subsidy budget of Rs 2.46 crore remains a big burden on the exchequer and needs to be pruned to a sustainable level by better targeting the subsidies in food, fuel and fertilizer. Despite being a vote on account, the initiatives on skill development, and the MSME innovation are laudable. While the industry too is disappointed for the country not being able to usher in the major tax reforms in the form of GST, we look forward to the new government to complete the task. The ASSOCHAM would like to see a government which is stable and decisive so that India reverts back to 8-9 per cent growth sooner than later. For us, there are no choices than to grow at a rapid pace whichever political combination is voted to power. Source :  http://www.assocham.org/prels/shownews-archive.php?id=4395&month=02&year=2014