Pranab Da's Top spin

Many called it a routine budget. BJP called it a timid one. Left is yet to say something to merit a headline (quite uncharacteristic of them as Pranab Mukherjee was smart enough to play Left’s thump card). I am sure they will take time to find a flaw or two. While corporates were watchful in their criticism of the Union Budget, individuals had much to cheer about, with a Rs 10,000 hike in the minimum threshold limit for tax payable and scrapping of the 10 per cent surcharge on the tax.

With job loss making headlines everywhere, raising the wage under NREGS to Rs 100/ per day is certainly a welcome move. This reinforces the claim of Congress that its hand is with the common man. There could be more political than practical in the increased outlay for the job guarantee scheme as UPA clearly rode on its NREGS glory in the recent parliament. So it is a pay back time and who knows this might turn out to be a 5-yr fixed deposit for the Congress led government at the centre.

Dalal street went to the red zone by the time the Finance Minister (FM) hit the last line of his speech. To explain this, Deepak Parekh, Chairman of HDFC was blunt enough to say that markets did not understand the budget. Sunil Munjal, MD Hero Honda was visibly excited about the renewed focus on rural areas. And, the FM rightly said in the post budget interview that markets expected too much from him. He was candid enough to admit that an annual budget cannot change things upside down. It had to be a gradual process and the FM has just started the match with love-all.

Raising I-T exemption limit was expected by many. However, scrapping FBT was a pleasant surprise for the India Inc. Many HR heads have already started restructuring the compensation. The FM may have missed a trick by not unleashing a wide-ranging e-governance program to pull out more economic efficiencies. However, the corporate sector, especially the IT industry gets a huge relief by the STPI extension by a year.

Crop loan at 6% interest for the farmers does sound like a sensible move forward following up of the loan waiver that Chidambaram had gifted to the farmers couple of years ago. Another Rs 1,000 crore has been promised for programmes for the development of irrigation. However, what remains to be seen is if this gets supported by the decline in farmers’ suicide which has been a major concern in past few years.

The focus on infrastructure comes out load and clear as the FM increased the planned spend for the Bharat Nirman programme by nearly 50 per cent and gave a Rs 12,000 crore boost to the Pradhan Mantri Gram Sadak Yojana. With a fiscal deficit of 6.8% (of the GDP) one cannot certainly expect more than what Pranab babu has offered (he is hopeful of the deficit to be brought down to 5% in 2010!). However, increasing concentration on JNNURM and NREGS will do the balancing act for the Rurban India.

With nearly 70 per cent of India's 1.2 billion people live in villages and agriculture contributes about 21 per cent to India's $1.3 trillion economy, the enhanced spending in rural areas does not raise many eye-brows. However, since the budget has come less than two months after the UPA government, led by the Congress party came to poser, the FM appears to have played to the gallery and tried to address the population that has helped the UPA return to power for a second-term. I would have personally liked to see a clearer road map for boosting rural economy than just greater spending on rural infrastructure.