The Economy is Fit and Healthy - R Seshasayee, Managing Director, Ashok Leyland Once again, and as expected, the FM has given us a budget with few surprises. Predictability may not be exciting but it certainly makes good economic sense, for, it allows all participating players to plan long term. The economy has performed at sustained high levels and, by not doing anything to alter the course or upset the pace, he has signaled that there will be a stable regime. It is a responsible budget where the agenda of social justice has been allowed to ride on the already announced and ongoing eight flagship programmes with momentum expected from the handsome enhancements in their plan outlays. An appreciable feature of the Budget is the new emphasis on private - public partnership as an effective tool for bridging the viability gap in investment intensive and broad-based programmes. While, we are quick to give credit to the FM for what he has proposed, credit is due for some of the temptations that he has resisted. By introducing no new taxes, he has signaled a stable tax regime based on moderate tax rates, widening of the base and better compliance. The economy has vindicated this approach by crossing the milestone 10% tax to GDP ratio. This is an event to be celebrated as it is truly indicative of an economy that has matured. We have also crossed an important threshold in fiscal discipline. A 3.8% fiscal deficit is symptomatic of a stable and growing economy, one that is growing without being leveraged unduly. It promises a double digit GDP growth without the dangers of a bubble burst. The reduction in peak custom duty rates signals the eventual destination of single digit peak rates. It could be argued that this unilateral reduction surrenders our negotiating capability in the WTO discussions but fixing it at the half way mark, the FM is acknowledging the maturity of Indian industry and, at the same time, retaining enough buffer for negotiation. The fine-tuning done this time has removed the anomalies arising out of FTAs and conform to the sound principle of inverted duty structure based on degree of local value addition. 'Should the market decide its preferences or should the Government mould it?' This question could be asked in the context of the excise duty reduction only for a particular segment of a car. I take this as a signal of eventual reduction in excise duties across the board. Like a good physician, the FM must deliver first aid as well as long-term health. In this budget in his prescriptions for the rural economy, along with interest relief for crop loans there are significant prescriptions in irrigation, R&D and education, to build durable capacities that will help integrate the rural sector with the rest of India. Rural road connectivity and access to information and services through the E-governance network are important steps in this eventual integration. Two concern areas identified in the Economic Survey are labour reforms and the ballooning petroleum subsidies now residing in the balance sheets of the public sector petroleum marketing companies. Surely, it has to spill over and the industry and the economy have to find a way to absorb it. Keeping these twin issues outside budget making and pushing it to the political domain is a way to create consensus. A disappointment is the continuation of a few irritating and non-productive tax instruments such as FBT and Bank Withdrawal Tax.