The budget cannot be a mere statement of accounts, finance minister Pranab Mukherjee said on Friday.
Budget 2010 went a step forward and laid out a plan for the next two years to bring down fiscal deficit to 4.1 per cent from 5.5 per cent now.
There have been no large increases in taxes direct or indirect and the governments focus on infrastructure and rural development has been retained. The reiteration for the direct tax code (DTC) and goods and service tax (GST) implementation from April 2011 is a very positive step.
The revision of income tax slabs for individuals will leave more disposable income with households. On the corporate tax front, though there has been an increase in the MAT rate, surcharge has been cut. Some rollback of the stimulus package has been proposed through selective hikes in excise/import duties, but this is in line with market expectations.
The budget has given a much-needed direction to the market from a short-term perspective and has also stuck to long-term growth plans laid out earlier. The main triggers from the budget were controlled fiscal deficit and rolling out targets for the next couple of years.
Relaxation in personal tax is going to have a positive impact on the overall economy.
The rural economy was also taken into consideration while formulating the policies and this will have a long-lasting impact on the economy.
As expected, stimulus rolled back was also gradual, which will allow the economy to adjust to the global economic scenario over a period of time.
Implementation of GST and DTC from April 2011 will boost the confidence of the global investor. Easing rules on FDI investment will be a positive for the retail and insurance sectors.
The thrust on divestment will help to control fiscal deficit. New banking licences to be given are a positive surprise. The budget will have an overall positive impact on consumption sectors such as retail, auto, and FMCG.
The changes will benefit infrastructure, realty and banking .