I’d like to hazard a guess that PC had two versions of the budget with election results almost coinciding with his tryst with the “aam admi”. And with the unpleasant result at hustings, he came out with the copy of budget that didn’t take any stern measures. That guess apart, an overriding visible concern was the unrelenting evil of inflation; though he stated that the average levels of this evil will be below 5.5%.
The last day of February indeed proved to be uneventful, even for the rural sector that was addressed maximum, though with a revenue deficit of 1.5% and fiscal deficit of 3.3% of GDP, the FRBM may not be completely off-track. An increase in government borrowing led to a fall in bond markets while the increase in dividend distribution tax and extension of MAT to IT saw the capital markets crash. PC used the time tested formula of making smoking costly to collect little higher revenues and higher allocation to agriculture sector in form of expanding roles of Regional Rural Banks and the concept of financial inclusion. The best part according to me was the encouragement to education in form of scholarships. Though the additional 1% cess may pinch many, but if used judiciously the same will go a long way in transforming India. And with the CST being lowered by 1%, you can get the benefit even before it is implemented if you are a good bargainer.
Of interest is the proposal to set up Debt Management Office in the Finance Ministry and relieving RBI of this job besides the introduction of Exchange Bonds where a company will issue bonds of another company (its subsidiary) – Financial sector is really opening up with such new products and also the reverse mortgage that we were hearing of for last 6 months!