There was a sense of disappointment among the six panellists who joined BT in analysing Budget 2012/13 at the India Today Conclave . In the run up to the Budget, expectations of key reforms such as FDI in retail were running high, since next year's Budget would be too close to the general elections. But the majority of the panellists, including BT Editor Chaitanya Kalbag, Mail Today Editor Sandeep Bamzai, BT Senior Editor Sanjiv Shankaran, Technopak Advisors Chairman Arvind Singhal, and N.R. Bhanumurthy from the National Institute of Public Finance and Policy, felt the Budget did not recognise the seriousness of the opportunity for reform.
Increased agriculture spending - agri credit was raised by Rs 1 trillion to Rs 5.75 trillion (one trillion equals one crore) - did not signal reform, said Ajay Vir Jakhar, Chairman of the Bharat Krishak Samaj. Jakhar said what the sector badly needed was an enabling environment.
The broad consensus was that the finance minister's fiscal consolidation efforts would go off track"
The panellists also felt the Budget failed to give definitive signals of stability to foreign investors. The proposal to amend the Income Tax Act with retrospective effect, from 1962, may deter foreign investment. It aims to enable taxation of mergers and acquisitions involving overseas companies with business assets in India. On the taxation front, the Budget did manage to compensate for inflationary pressure. With the revised tax slabs, it brought in fragments of the Direct Tax Code Bill, said Tapati Ghose, Partner at Deloitte Haskins & Sells.
The housing sector was one of the few with reason for cheer. Budget 2012/13 recognised the need for affordable housing, said Anurag Mathur, Managing Director of Cushman & Wakefield, a realty consulting firm, by allowing real estate developers to raise funds through external commercial borrowings (ECB) for low-cost housing projects. It has also set up the Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans. This could provide an incentive to prospective customers going in for affordable homes.
ECBS will not be enough to boost the power sector, said Bamzai. He pointed out that the sector was battling multiple issues such as coal shortage and infrastructure hurdles, and funding alone would not ease the challenges. The broad consensus was that Finance Minister Pranab Mukherjee's fiscal consolidation efforts and roadmap to reduce the subsidy burden to less than two per cent of the gross domestic product may go off track.