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February 27, 1999
'I find this a very positive Budget'
I find this a very positive Budget, keeping in mind what one can expect from a Budget.
We shall unfortunately continue to have problems of a weak government and resulting political uncertainty, creating a situation where we require decisions that may not be populist and so cannot be taken.
I refer, for example, to the reduction of non-plan expenditure by incurring unintended and wrongly targeted subsidies and a substantial -- and not just a ceremonial -- downsizing of the government. I also refer to the need for a flexible labour policy, keeping in mind the need for a human face to that policy.
I believe that these decisions, including genuine privatisation of public sector units, are not likely to take place with the present arithmetic in the Lok Sabha.
However, the Budget, especially for direct and indirect taxes, is planned very well, and I am personally very satisfied. I am surprised at the projected fiscal deficit of 4.4 per cent for the coming fiscal year. This looks too good to be true, keeping in mind that the fiscal deficit for the current year 1998-99 is likely to be 6.5 per cent.
I have been quoted during the last two months as stating that there is a need to increase the price of diesel and to reduce the price of petrol. I even said this in the pre-Budget meeting. I therefore welcome the Re 1 cess on high-speed diesel, primarily because it a good way to raise revenue.
Also, the difference of price between diesel and petrol in India is artificial and much too high; it needs to be bridged. The effect on Bajaj Auto will be insignificant because the price of diesel will remain Rs 10 a litre and the price of petrol over Rs 23 a litre, depending on the location.
The question of Indian or foreign industrialists investing money in infrastructure or any other project depends on many factors, which do not have much to do with the Budget. I re-emphasise the need for political stability and a strong government that can take decisions which are not necessarily populist. Having said this, this Budget has done nothing to discourage investment in any area. Whether investments come in into infrastructure, frankly, remains to be seen as these depend on many other factors.
Rahul Bajaj is chairman, Bajaj Auto.
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