While many may term Budget 2008-09 as populist, the finance minister's proposals should positively impact all sections of the society, including industry and the common man.
The proposals to waive off loans would benefit four crore farmers, while the increase in the income tax slab rates would benefit another one crore individuals. Although there are no significant proposals for India Inc, they don't have a big reason to be unhappy about either. Although the demand for cut in corporate tax rate (or removal of surcharge) among many others has not been heeded, the Budget has not increased the burden in any manner.
Moreover, it has proposed a reduction in the peak excise duty from 16 per cent to 14 per cent and in central sales tax (CST) from 3 per cent to 2 per cent, while leaving import duties unchanged (read: no reduction).
That apart, there are proposals for specific sectors including auto, steel and pharmaceuticals among others aimed at providing protection or growth stimulus to Indian industry. Besides, higher allocation towards infrastructure, power, irrigation and defence sectors are also a step in the right direction.
All this put together and the fact that there is more money in the hands of individuals, the Budget aims to provide a boost to consumption and simultaneously, curb inflationary pressure. To give an example, for a salaried individual earning Rs 5 lakh a year, the income tax proposals mean a saving of about Rs 45,000 per annum, which is equivalent to a month's salary.
In either case, whether the additional cash-flow contributes by way of higher consumption or higher savings or a mix of both, it should ultimately trickle down and aid economic growth. And, this is precisely what seems to be the need of the hour. With global and domestic economies showing signs of deceleration in growth rates, these measures should hopefully help the country sustain high GDP growth rates and, help India Inc record healthy earnings growth.
On the flip side, issues like maintaining fiscal discipline and achieving targets with respect to social sectors like education and healthcare need to be watched. Read on to find out what the various proposals are and how they impact the individual sectors and companies. To read more click here...
Text: Smart Investor Team
Image: Indians, mostly farmers and the salaried class rejoiced at the new Budget proposals.
Photograph: Narinder Nanu/AFP/Getty Images
Also read: 9 ways the Budget affects you 
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