Date:02/03/2006 URL: http://www.thehindubusinessline.com/2006/03/02/stories/2006030202770300.htm

Back 'Makes good economic sense'

Our Bureau

Mr R. Seshasayee

Once again, and as expected, the Finance Minister has given us a Budget with few surprises, reacted the Ashok Leyland Managing Director and Vice-President, Confederation of Indian Industry, Mr R. Seshasayee. Predictability may not be exciting but it certainly makes good economic sense, for it allows all participating players to plan long term. By introducing no new taxes, he has signalled a stable tax regime based on moderate tax rates, widening of the base and better compliance. 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 Finance Minister is acknowledging the maturity of Indian industry, and at the same time, retaining enough buffer for negotiation. A disappointment is the continuation of a few irritating and non-productive tax instruments such as FBT and bank withdrawal tax. For impact on Ashok Leyland, commercial vehicles have been left out of the (purview of) reduction in peak customs duties. To that extent, it is good for Ashok Leyland.