Business Line Coverage of GTech's Budget Statement

Budget regressive, inflationary'

Vinson Kurian

Thiruvananthapuram, March 1

The Kerala Finance Minister, Dr T. M. Thomas Isaac, has said that the Union Budget presented on Friday was not just regressive in intent but could also potentially trigger fuel-led inflation.

Speaking to Business Line, Dr Isaac said here that the total expenditure proposed in the Budget estimates for 2010-11 represented a rise of only 8.6 per cent over those in the revised estimates.

Headline inflation

This pales into insignificance when considering the runaway growth in headline inflation. In real terms, there has been a negative growth in budgeted expenditure, which would harm the economy even as it is just emerging out of a recession. Upward revision of excise levy on diesel and petrol would trigger a fuel-led inflation across the country, especially in largely consumerist Kerala. All indirect tax proposals would all hit the State's economy badly. Covert attempts to cut food and fertiliser subsidy was another major setback.

The Union Finance Minister should have come clean on the expected proceeds from the sale of spectrum for 3G services. This is a clear instance of an entry that needs to go under the head of capital receipts.

Mr Pranab Mukherjee will be ill-advised to appropriate the same under revenue receipts and stealthily claim attendant benefits from this none-too-transparent style of book-keeping, Dr Isaac said.

Group of Technopark companies (GTech) here has described the Union Budget as a focussed and balanced one, aimed at putting the country back on the path of economic growth.

It said that the allocations for infrastructure, agriculture and health would ensure sustainable growth. Containment of the fiscal deficit to 5.5 per cent would send a positive signal to investors.

But GTech was disappointed at the increase in MAT (minimum alternative tax) from 15-18 per cent . This will hit the mid-size IT companies operating in the State.

It felt that the STPI scheme should have been extended till 2015 to support IT companies operating in tier 2 and tier 3 cities.