Amadeusz Juskowiak

Indian budget comes in for wide criticism

Opposition politicians businessmen and newspapers criticised Indias newly unveiled 198788 budget and large projected deficit of around 57 billion rupees

They said the budget failed to provide incentives for economic growth and merely tinkered with tax reform

But few politicians were prepared to criticise a sharp rise in defence expenditure in the Hindumajority nation where playing on fear of aggression by Moslem Pakistan has proved a vote winner The Indian Express the countrys biggest selling paper said The defence cow has never been holier

The Sunday Mail newspaper branded the budget shamelessly political It said in a front page commentary the budget is bad for growth bad for prices bad for the stock market and neutral in respect of everything else

Businessmen polled by Reuters said the budget had done little for them

Gandhi announced small increases in poverty alleviation and education outlays but he ordered a holddown on current expenditure in an attempt to rein in the budget deficit He told ministries to curb spending and promised a review of moneylosing public sector industries

Gandhi lowered import tariffs on some computer parts but otherwise did little to extended the economic liberalisation policy launched two years ago

Reaction in Bombay Indias business capital was generally unfavourable

Businessmen and economists said the budget had no proposals for closing the 198788 budget deficit It also failed to boost industrial investment and productivity needed to lift real economic growth above the five pct a year envisaged by the 198590 development plan

Nalin Vissanji President of the Indian Merchants Chambers of Commerce said the budget gave no incentives to the capital market and had not fulfilled a government pledge to remove surtax on corporate income

Shares on The Bombay Stock Exchange Indias biggest fell in a postbudget session yesterday but brokers welcomed Gandhis proposal to set up a regulatory board for the securities industry

The exchange was shaken last year by several scandals and trading was suspended several times

Brokers said trading volume may increase with the change in capital gains tax on stock sales

Stockholders can now sell shares after one year instead of three years without incurring capital gains tax

Stock Exchange President Ramdas Dalal said yesterday the fall in share prices after the budget came as profits were taken and he expected to the market to firm in days to come