IIFT, Kolkata Organizes Panel Discussion on Union Budget of 2009-10

IIFT, Kolkata Organizes Panel Discussion on Union Budget of 2009-10

The Union Budget of 2009-10 has been met with mixed responses from industry, stock market, academia and the common man. The stock market has plummeted down at an alarming rate since the Budget announcement, fuelled by a large gap between the expectations of corporate India and actual measures taken in the Budget.

The Budget has been perceived as one targeted majorly at the common man, and it has evoked a sceptical reaction in the main, from India Inc. It is seen as one aimed at the long term, rather than on immediate reforms. These sentiments were echoed in a thought provoking and enlightening panel discussion on the Budget at Indian Institute of Foreign Trade, Kolkata on 8th July , where the general consensus was that it was a ‘A Budget of Intent rather than Content’.

The discussion was moderated by Professor Ranajoy Bhattacharya from IIFT, a Fullbright scholar and a prominent name in the economics field. The distinguished panel included Mr. Basant Maheshwari, a full-time investor and stock market expert for EquityDesk.com, Mr. Anirban Ganguly, Sr. Manager of Taxation at KPMG, Dr. Dipankar Das Gupta, renowned economist and former head of the Indian Statistical Institute & Mr. Asrujit Mandal from KPMG, a Tax and Regulatory matter expert.

Mr. Maheshwari, underplayed the impact of the Budget on the stock market, calling it ‘a catalyst for the market to act as it wants to do’. He agreed that the effect was more short term, as within two weeks the stock market would be back looking at the Dow Jones and individual company results. He appreciated the fact that the changes that the government was trying to implement were good from the long term perspective, and this budget promised dramatic changes in the subsidy structure. However he did voice concerns about the large fiscal deficit as well as the insignificant disinvestment measures taken by the government. He summed up the budget as one which showed the Finance Minister as an ‘accountant rather than a visionary’.

Mr. Mandal and Mr. Ganguly gave an eye opening analysis of the budget from the taxation perspective. While Mr. Mandal dissected the budget from the point of view of direct tax, Mr. Ganguly gave an indirect tax perspective on the budget. Mr. Mandal expressed confidence about the resilient nature of the Indian economy. However he did express the view that with no changes in corporate surcharge and increase in MAT, the industry had little to cheer. He felt that the priorities enumerated in the Economic Survey should be implemented, specifically the return to fiscal prudence and the revitalization of divestment programs. Mr. Ganguly felt that it was imperative that India has a smooth transition to the GST (Goods & Services Tax) era. He expressed his concern on the lack of a proper timeline or framework for various phases of GST implementation. However, he did sound positive about the simplification of refund schemes for export services and the enhanced coverage of taxes.

The final speaker of the session was Mr. Dipankar Dasgupta who gave an insight into the budget from an economist’s perspective. He pointed out a major anomaly in the finance minister’s statement during the budget session where the finance minister had quoted that the principal growth driver during the previous UPA government’s reign was private investment, where as in reality private sector growth has been on a downturn since the UPA came into power in 2004.

He lauded few of the measures undertaken by the government especially the Rajiv Gandhi Rural Electrification Scheme and the NREGA. However, the achievement of the objectives of these schemes remained in doubt due to the large fiscal deficit. Professor Dasgupta shed light on some alarming trends in the government’s planned and nonplanned expenditure, especially in the education, health and defence sectors. His discussion revealed the fact that perhaps the government’s expenditure was not targeted in the right direction. Maintainance of schools, hospitals in villages remains neglected while there is huge expenditure on purchase of weaponry every year. In his opinion the budget was more a political document than one which promised growth of the economy.

In the interactive session which followed, the panelists discussed a variety of issues from fiscal deficit to comparisons between India’s and China’s economy. One significant point made by Mr. Maheshwari was that the emphasis on development at the Bottom of the Pyramid, which has been frowned upon by many in India Inc, is actually great news for the consumer sector,. Schemes such as NREGA would increase the consumption power of the poorest of the poor, and hence lead to higher sales for the companies. Another thought expressed worth pondering upon was the view that perhaps India is moving towards the China Model of growth, wherein you build infrastructure first and then invite investment.

In all, the panel came to a consensus that the Budget should be looked as one with honorable intentions for India’s development, rather than one which promised immediate results.

Concluded.

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