The Hindu Business Line : Yes to inclusive growth

The Finance Minister has sought to maintain a thrust on growth through enhanced outlay in infrastructure while ensuring fiscal prudence. It should help to sustain growth over the medium term. From a capital markets perspective, the increase in dividend taxes is likely to be disappointing for markets, which were expecting some moderation in taxation. However, the impact may be more in the short term. On the positive side, there is a concerted effort at improving the tax administration through usage of a single PAN card and also broadening the market by allowing short selling by institutional investors.

Further, the Budget seeks to move along the proposed FRBM lines with fiscal deficit forecast to be lowered to 3.3 per cent of GDP and pegs revenue deficit at 1.5 per cent for FY08 while targeting growth of 10 per cent by the end of the Eleventh Five Year Plan. Infrastructure remains a critical challenge and clearly the enhanced outlay on infrastructure in Bharat Nirman (capex up 32 per cent) to Rs 2.4 trillion is another step in the right direction. This should help in underpinning the current upswing in the investment cycle. He has sought to ensure that both the farm sector and the social objectives of expanding the education base are not ignored. Increased outlay on social infrastructure would bring more Indians into the economic mainstream and go a long way in achieving the desired inclusive economic growth. Further, the focus on education should help address the growing need for talent and skilled workforce as the economy continues to expand.

(The author is Chairman, DSP Merrill Lynch & Vice Chairman, Merrill Lynch International.)

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