By Atul Sinha
Director, International School of Business & Media (ISB&M)

The budget is encouraging due to its focus on agriculture, irrigation, education health care and power. Since it addresses some of the concerns of the industry in general, it should help fuel demand and economic growth going forward.

On the bright side, the irrigation and water resources finance corporation, with an initial corpus of Rs 100 crore, was deemed as welcome move. The impetus provided to irrigation is laudable.

As far as the auto industry is concerned, however, it did not fully meet expectations.  The industry expected a reduction in excise duties for all cars, which has not happened. This industry is one of the growth drivers of the economy. On the other hand, reductions in Excise Duty of Small Cars from 16% to 12% and for Hybrid Vehicles from 24% to 14% are welcome decisions.

The government's proposed move to increase the excise duty on packaged software to 12 per cent from existing 8 per cent may affect IT usage in the country. The non-extension of tax holiday under STPI scheme in the Budget proposals for 2008-09 will badly affect employment generation in the IT sector.

With the allocation for defense being increased by 10 per cent, pushing it above Rs one lakh crore, local small and medium sector units have reason to celebrate. While the Rs. 34,400 crore allotments for education and the three new IITs in Andhra Pradesh, Bihar and Rajasthan is encouraging.

Some of the other announcements made by the Finance Minister for manufacturing and R&D activities should enhance the competitiveness of Indian industry. There should have been some reduction in corporate tax and similarly there should have been specific schemes for infrastructural developments in the budget, which is also missing.

However, the intention to promote the development of infrastructure, particularly in rural areas, is a positive step. The government's commitment to continue with its reform process is likewise positive. These proposals, if implemented effectively, should have a positive impact on industry and the economy as a whole. The challenge now is the implementation of the proposals. Our hope is that the market will respond favorably.