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Budget 2012-13 fails to inspire hope
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Bikky Khosla | 20 Mar, 2012
The Budget is over and, to the surprise of none, the criticism continues. There is a lot of analysis, arguments and noise, from which one thing is clearly evident that the Budget has nothing to cheer the industry up. Most of the demands raised by different sectors haven't been addressed and neither the Budget has come with much to convince that there are some long term-benefits hidden underneath, as opposed to the Finance Minister's claim made during his Budget speech.
When it comes to the SME sector, the Budget doesn't offer much to strengthen the "backbone of the economy" -- a term often used by our politicians to emphasize the importance of the sector. Of course, there is a Rs. 5000 crore-venture capital fund, a heightened turnover limit for compulsory tax audit to Rs. one crore, and exemption of capital gains tax on sale of a residential property by a MSME unit to purchase new plant and machinery, but these measures are far away from being enough.
Similarly, as far as the export sector is concerned, the Budget fails to cheer us up. Considering the global economic uncertainties ahead, I was expecting that the Finance Minister would introduce some strong measures to boost the sector, but instead he appeared to be complacent about our external trade, citing India's performance during the April-January 2011-12 period. He also turned a deaf ear to the long-standing demand of the sector for extending the interest subvention scheme beyond March 31, 2012, and also went for extension of MAT on proprietorship and partnerships firms.
However, we can't deny that there are some good steps in the Budget, including the proposal to enhance skill development in the manufacturing sector, set up up two mega handloom clusters, a powerloom mega cluster and three Weavers' Service Centers, introduce a Rs. 500 crore-pilot scheme for promotion and application of Geo-textiles and a Rs. 3884 crore-package for waiver of loans of handloom weavers, and reduce duties for inputs of industries such as paper, medical devices, etc.
On excise duty, one of much talked-about issues of this Budget, I think that bringing it to the level of 12 percent, which is still lower than the 14 percent before the financial crisis, is a move taken considering the improved economic situation. But when it comes to the proposed raise in Service tax, the hike seems harsher, as it may fuel inflation and dry up domestic demand, putting the principal objective of the budget to "focus on domestic demand driven growth for recovery" at stake.
Overall, the national Budget for the financial year 2012-13 is realistic but it fails to inspire hope. There is no reform effort evident but only a few passing remarks on some crucial issues like DTC, GST National Manufacturing Zones, MSE Procurement Policy, and SME Exchange. It lacks solutions and doesn't even offer any clear path how to achieve the macroeconomic goals set by itself. And when it comes to the SMEs and the export sector, it does not meet our expectation, when we compare the needs with what the Budget has proposed.
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GDP
Shwethway | Thu Mar 29 10:28:38 2012
GDP got nothing to do with SME. Its depend on system what they used to do.
Budget 2012-13 fails to inspire hope by Bikki Khosla
John Kurain | Sat Mar 24 06:41:09 2012
I do not agree with the authors statement that quote "But when it comes to the proposed raise in Service tax, the hike seems harsher, as it may fuel inflation and dry up domestic demand" unquote. He is quite comfortable with the fact that increase in excise duty for manufactured goods from 10 to 12 percent is O.K., but the hike is not proper for the service sector. The manufacturing sector in India is one of the most heavily taxed as in addition to excise duty it is also subject to Value added tax of 14%. The net tax burden is thus more than 28%. So I fail to understand the logic of the author?
Why SMEs silent on their issues
Ajai Gupta | Thu Mar 22 05:34:40 2012
I think it depends less on Budget (unfortunately) and more on SMEs themselves to fight adversary and rise. I can't remember even a single Budget that has ever really helped the sector. It is surprising that SMEs, even when they get a platform, keep their mouth shut. They should tell the world ----in fact shout ---- what they wanted from the recent Budget -- only concrete issues and measures as they face in day to day business. We should get a list of at least 1000 issues. But if they prefer to be silent, none can help them to reveal their problems.
Other Subsidies
Rohit | Wed Mar 21 09:17:29 2012
Since the inception of grains at Rs.2/kg, there has been shortage of labour. I feel, it is important that the Govt remove this subsidy rather than tax other units more. Not removing / reducing the grain subsidy but taxing the other sectors will increase the problem instead of bringing some relief.
Budget 2012-13
Surya Khanna | Wed Mar 21 00:16:08 2012
The Budget lacks vision. Perhaps Finance Minister was very busy in attending to Party Affairs and finding solutions to problems. He is often considered as TROUBLE SHOOTER in congress party. He could not give much attention to it and direction was lacking completely for incentives for export promotion and many important issues. No effort seems to have been made towards making the currency freely convertable? An explanation from FM is required on such issues to sensitize at least the educated masses.
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