PwC: Union Budget 2011 - Sustaining Growth Momentum
March, 24th 2011
India experienced quickened economic recovery powered by strong internal demand. The economy witnessed an increase in growth momentum from 6.7% in 2008-09 to 7.4% in 2009-10. The same climbed back to its pre-economic crisis growth trajectory of 8.9% in the first half of 2010-11.
Budget 2011 has clearly set the stage for the coming fiscal year with a growth expectation of 9% and projected gross fiscal deficit of 4.6%. Roadmap has been laid down for the much awaited financial sector reforms (including FDI insurance sector, private banking licences, foreign investment in mutual funds etc).
The chief highlight of the budget proposals from a Direct tax side has been the re-confirmation of the date for Direct Tax Code implementation.
Further, provisions of Minimum Alternative Tax and Dividend Distribution Taxes have been extended to developers and units in Special Economic Zones thereby impacting the attractiveness of these facilities to investors and users.
On the indirect tax side the Finance Minister has reiterated his commitment to early implementation of a uniform Goods and Services tax regime, in addition to this he has also widened the scope of service tax. Overall the Budget is likely to provide the necessary stimulus for the Indian economy.