FM fails to contain inflation. Wish they had done more.

BANGALORE, INDIA:The FM correctly identified the principal areas of attention to be the food security, containing inflation as well as enabling education for India's billions said Mr Srinivasan K Swamy, President, Madras Chamber.

While the FM emphasized containing inflation, it bore very little when it came to measures to contain inflation. On the other hand, the escalation of fuel prices, increase in excise and expanding the ambit for service tax are likely to trigger prices all round.

Further unproductive expenditure in the rural economy increases inflationary trend as seen in the past. Rural investments to improve infrastructure is welcome but not increase in doles in the name of social equity.

The FM deserves compliments for bringing transparency in eliminating below the line financial commitments. During the difficult phase when the global meltdown had its adverse effects on India, the achievement of restricting the fiscal deficit to 5.5% needs to be applauded. Increased allocation to education and health are noteworthy.

The increase in MAT has to be seen in the context that it started at 7 ½ per cent and moved to 10 per cent and thereafter to 15%. The additional impost of 3% making MAT to 18% could have been avoided so as to keep in pace with the overall investment climate proposed for the development of the economy. Further, under the Direct Taxes Code, coming into force in April 2011, the set off on MAT will be withdrawn.

The emphasis for improving the R&D in the industrial sector with additional grants is a good initiative to enable Indian industry reach global standards.

The FM needs to be complimented for providing Rs 200 crores for improving the environment at Tirupur and thereby enabling the knitwear industry at Tirupur to remain competitive in the global market.

On the infrastructure front, allocation of 46% plan expenditure is a welcome measure. The priorities accorded to the power sector and road development are commendable. However, the execution has so far been significantly below Promise.

The Chamber would consider this budget to be proactive and it is hoped that the discussions in the legislature would be able to overcome the shortcomings which are presently evident in the financial statement.

Source: www.madraschamber.in