Focus on agriculture
Economic growth is greatly dependent on the Government's policies in the farm sphere. Ranabir Ray Choudhury
Business Line
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Budget: Modi may thank people
ON FEBRUARY 25, when state finance minister Vajubhai Vala rises to present his record 13th budget, there will be two words that can be read from between the lines of his elaborate speech. Thank You.
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Highlights: Cash surplus at record high
The Minister for Railways, Mr Lalu Prasad, flanked by the Ministers of State, Mr Naranbhai Rathwa (left), and Mr R.Velu, arriving to present the Rail Budget on Tuesday. Review of Performance: 2007-08
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Focus on agriculture
The article on "Focus on agriculture' (Business Line, February 18) highlighted the need for giving importance to the agricultural sector in the context of its importance to the economy. The article focused on price levels of agricultural commodities in the background of the Government's concern for checking inflation. In this context, it is worth looking at the growth strategy adopted by Israel, a small country made up of predominantly desert and semi-arid land. Since its independence in 1948, it has been able to increase its agricultural production 16-fold, thanks to the synergies and co-operation between agricultural scientists, extension workers, farmers and service industries. Israeli farmers conserve water by constructing terraces in the hilly regions, which naturally holds water. Besides, drip irrigation techniques are used to reduce water consumption for agriculture. Also, use of optimal water, sunlight and air pressure increases productivity. Genetic technology and tissue culture have been employed to reduce the cropping time. Besides, techniques such as use of soil preparation machinery have increased soil fertility. Result: Higher production at low cost. This has enabled the country to export more than 70 per cent of its farm produce. What India requires is a marriage of superior cost-effective techniques and farming, akin to the Israeli model, to increase production at lesser cost. This will increase the profit margin of farmers and could be a solution to their economics-related problems. P. E. Muthu Mumbai
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Auto industry sees positive impact
The Budget has evoked mostly a positive response from the automobile industry. About large cars: The General Motors India President, Mr Karl Slym, has said the company expected duty reductions for all types of cars. "Generally, it is all right. We have heard about national highways programme but we are yet to get the details. Large cars (which attract excise duty) at 24 per cent are left out. That is a bit of disappointment.' Positive for the sector: Mr Baba Kalyani, Chairman and Managing Director of auto-parts company Bharat Forge said input cost reduction and lower project import duties are a positive for the sector. "Scrap duty has been an area of concern for the auto component industry and (the fact) that this has been reduced is also good news,' he said. Not hurting: The Sona's group's Chairman and Managing Director, Mr Surinder Kapur, termed the Budget an election year Budget but one which had not hurt the industry. Using-up stocks: While lauding the proposals, the Kinetic Group's Chairman, Mr Arun Firodia, said dealers have stocks purchased at a higher rate of excise duty. When these stocks are exhausted there would be a reduction in prices, he said. Rekindling interest: Mr Ajit Rai, Managing Director of Suprajit Engineering, which makes auto components, said the duty reductions will rekindle consumer interest to buy cars. He said reduction in customs duty on scrap should moderate price increases in steel and aluminium, which has seen a big run up. Softening effect on input cost: Mr V. Mahadevan, Managing Director of Ennore Foundries, said the duty cuts will have a positive impact on the growth of the manufacturing industries. "Removal of custom duty on scrap import will have a softening effect on the input cost of raw materials,' he said. Demand trigger: The Managing Director of Aditya Auto Products & Engineering Pvt Ltd, Mr C. Jayaraman, said the duty reduction would not help the auto component industry directly, since the savings have to be passed on to the customers immediately. Small car hub: The Managing Director of Liners India Ltd, Mr S. Ganesh, pointed out that the Budget was on the same lines of the Automotive Mission Policy and the country was set to become a major hub for small cars.
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Aam aadmi to ride the auto sector
The real winner is the small car buyer who will have to pay Rs 5,000 to Rs 20,000 less for his purchase.
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Loan waiver: Cheer without fear
Holding down inflation and interest rates, energising the production function, pushing investments, saving livelihoods, and raising incomes and consumption became the principal objectives of the Budget. The waiver of farm loans is a means to the accomplishment of these goals. G. Ramachandran First things ought to come first. There is an exaggerated view that the waiver of farm loans is senseless and indefensible. The waiver has been criticised on the grounds that it would vitiate the credit culture and exacerbate moral hazard in banking. The critics have no such views when commercial and industrial loans remain unpaid or are waived and written off. The waiver of farm loans is a wholly sensible and defensible decision. The waiver at its worst estimate is expected to cost the exchequer a big sum of Rs 60,000 crore. But it will most likely trigger an increase in gross domestic product (GDP) of over Rs 3,72,000 crore over the next three years. The exchequer will earn at least Rs 44,000 crore if the tax-to-GDP ratio is 12 per cent. The nominal net loss could at worst be Rs 16,000 crore. But there may be no loss at all. The loss could turn into a sizeable profit. There are three reasons for this optimism. First, the loss to the exchequer would be lower when the other robust stimuli to growth act upon the economy. Second, the waiver would break the logjam in the fallow farmlands. It will put crops back on cultivable lands that have remained fallow. A spurt in output will kill inflation. Third, lower inflation will keep interest rates low. Nonperforming assets of banks will rebound smartly. Therefore, law-abiding taxpayers and conscientious borrowers that repay loans have nothing to fear. Smartly managerial The Finance Minister has acquired a reputation for smart and conscientious fiscal management since 2006. He has managed India's fat fixed costs of running government pragmatically. He has outrun the beastly costs by taking a managerial view of tax revenues. He has stimulated tax inflows by lowering the unit excise duty rates. He has raised the threshold of the service tax. The raising of the personal tax threshold level and the slabs expands incomes that can be allocated to consumption. It expands the size of the indirect tax market as a result. Yet, it ensures that the good times of ordinary people will continue. The cut in excise duties applicable to many consumption goods and consumer durables deserves special attention. Compliant and conscientious The boost to consumption may appear scandalous. But the Finance Minister has stayed steadfastly on course to meet the requirements of the Fiscal Responsibility and Budget Management Act (FRBMA). Ernst & Young, a global accounting confirm, has aptly commented that India has
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Maharashtra's annual Plan fixed at Rs 25,000 cr
The Plan outlay of Maharashtra for 2008-09 has been pegged at Rs 25,000 crore inclusive of additional Central Assistance of Rs 250 crore for projects of special interest to the State. This was agreed at a meeting between the Deputy Chairman Planning Commission, Mr Montek Singh Ahluwalia, and the Chief Minister of Maharashtra, Mr Vilasrao Deshmukh, here today. In his opening remarks, Mr Ahluwalia said performance in both human development and growth rate of the State was satisfactory as it is all set to achieve growth rate above national target for the Eleventh Plan. Against 3.8 per cent growth rate in Ninth Plan, the State has recorded growth of 8.2 per cent in the Tenth Plan. Improving urban infrastructure, housing, irrigation and agriculture should be given priority during the Eleventh Plan. He said the Commission was keen to improve performance of centrally sponsored programmes and invited suggestions on flexibility needed in the guidelines of these programmes.
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ITC's forest initiative greens over 77,000 hectares
Kolkata, March 10 ITC Ltd, according to the company's just released 4th Sustainability Report, under its Social and Farm Forestry initiative has greened over 77,0000 hectares, creating an estimated
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Mineral policy to focus on infrastructure growth
Focus on cost-effectiveness: Mr T. Subbarami Reddy (right), Union Minister of State for Mines, and Mr G.V.