India announces its budget

Amidst dying hopes of tensions curbing through the talks between her and Pakistan, India has decided to announce her proposed budget for the next fiscal year and I could not resist myself from posting about it.Here, I would like to remind the readers of the prevalent poverty in India even though it is said to be the emerging economic superpower in the world (India has the 4th biggest GDP in the world but ranks a meager 128 in GDP per capita- a mere 4 positions higher than Pakistan). The point here is that due to it being the second most populous country in the world, it faces major poverty problems. Now, the government of India is extremely aware of the perennial thorn in the flesh and thus, this budget seems to be dedicated to curb the problems of the poor majority of the populace of India. The government has made it their first priority to combat the spiraling food prices and a tight monetary policy is what seems imminent in the review in April. However in the budget itself, the government seems pretty lax. a major boost to disposable income of the middle class has been given by decreasing the income tax rate of the taxable income between 300,000 and 500,000 from 20% to 10%. This reform, apart from strengthening the voter base for Mr. Purnab Mukerji, will also stimulate growth in the economy. However, it may also have the effect of causing demand pull inflation. Corporate tax has also been reduced serving further to stimulate growth. Speaking of corporate, the IT industry seems all too happy with the budget because it is so supportive of SEZs. Even though, they are not too happy with the extension of tax breaks under the Software Technology Parks of India (STPI) scheme, the big of the IT industry feel that they are not being made to compromise much.
As if giving a thumbs up to the Mr. Mukerji, the stock market jumped 391 points and it seems that the market will certainly continue its roll on the budget. Pakistan is going to be majorly affected by the decision to increase the money spent on defen. The Indian government increased its defence budget to 1.47 lac crores. Hardly a thing for Pakistanis to laugh at. Rs.24000 crores has been allotted to micro, small and medium industries (something Pakistan needs to desperately learn from).
Now, here comes the views on the budget part. Manmohan Singh has remarked on a budget that it would increase growth and it is an exceedingly well done. Mr. Bajaj of Bajaj industries said on a BBC interview that some have said that it could have been done a little better but he would like to see anybody do it in a better way than present. So, overall, it seems that people are pretty happy about the budget. Even though, relations between India and Pakistan remain constricted. I pray that this budget does manage the difficult balance allowing growth while controlling price level gracefully.
(Image from Panasianbiz.com)