Post Budget Analysis 2008

The Union Budget 2008 coming on the backdrop of global slowdown and uncertain international stock markets has tried to be both prudent and progressive. The farm loan waiver, increase in IT limit, cut in excise duty all point to an effort that is aimed in ensuring that the growth engine does not slow down.

IIIM organized an open discussion on "Post Budget Analysis-2008 " on March 18, 2008, with the panel of experts from various sectors.

The panel of experts comprised Mr. Rajeev Sogani, Chartered Accountant, as moderator for the session, Mr. B.K. Sharma, Branch Manager, SBI, Jaipur, Mr. Ghanshyam Kanungo, Vice President FORTI (Federation of Rajasthan Trade & Industry), Dr. L.N. Nathuramka, renowned economist and Prof. N.C. Pahariya, University of Rajasthan.

The overriding theme of Budget 2008-09 was populism, as expected. Apart from major thrust on the basic drivers of rural upliftment, the government has tried to stimulate consumption; moderate inflation by various means was the opening note of Mr.  Rajeev Sogani. He remarked that this union budget is Dream Budget for farmers.

Mr. Kanungo discussed the effect of Union Budget on industries. He elucidated that apart from major thrust on the basic drivers of rural upliftment, the government has tried to stimulate consumption and moderate inflation by various means. The key negatives were the lower industry and infrastructure focus and increase in short term capital gain tax on equity transactions. All in all, it is a feel-good budget for a common man but lacks any immediate triggers for equity investors.

Mr. B.K. Sharma opined that it is necessary that credit expansion is non-inflationary and the productive sectors receive adequate credit at reasonable cost. While any further deceleration in credit provided by banks "would have a detrimental impact on the overall economic growth”.

Prof. N.C. Pahariya highlighted that the government has taken some concrete steps towards illiteracy, education, rural development including agriculture, infrastructure, health, employment, drinking water facility and sanitation. Major concern that the government would be facing in the coming year is inflation. A rise in the disposable income of the citizens due to reduction in the tax slab and cut in the excise duty of various items might lead to a rise in the disposable income.

Indian government will have to collaborate with the Reserve Bank of India in order to combat the inflationary pressures to be faced in the near future.

Mr. L.N. Nathuramka said that raising the income tax exemption limit as well as adjusting the rate slabs will make a lot of people, mostly young, happy. The revenue impact will be offset in just a few years as rapidly rising incomes take these people into either the first tax bracket or higher ones in short order. On the other hand, the loan waiver for farmers, whose burden falls entirely on the banking system, is a clear triumph of politics over economics. Infrastructure has also received attention, across the range of sectors - highways, power and the integrated rural and urban infrastructure missions. The overall availability of resources for these sectors has been enhanced by tapping into extra-budgetary resources, which opens up the opportunity for private participation and market discipline.

The panel experts contented the inquisitiveness of the audience by answering the queries raised by them. The seminar was well appreciated both in terms of Intellectual and quality content. The programme accomplished its objectives well and was a grand success.