Time was when Indian economy did not matter much in the global economic framework. But things have now changed drastically. Being the second largest consumer society in the world, India now occupies a very important place in the expanding horizons of global business and trade opportunities.

While presenting the budget in the Parliament, Mr Sinha himself pointed out that the Indian economy had continued to exhibit both growth and resilience that had characterised its performance in the past ten years. "Overall growth this year," he added, "is expected to be about 6 per cent despite a series of unexpected setbacks." Perhaps the idea behind the blessed use of the phrase is that there would be stronger growth in the coming year. Experts have predicted that this year (2001-02) will register a growth of 6.5 per cent.

The main strategy for 2001- 02, the budget document states, is to ensure spreading of agricultural sector reforms and better management of food economy, intensification of infrastructure investment, continued reforms in the financial sector and capital markets, deepening of structural reforms through dismantling of controls constraining economic activity and human development through better education opportunities and social security.

The objective also talks about stringent control of non-productive expenditure and rationalisation of subsidies, acceleration of privatisation process and restructuring of public enterprises, revenue enhancement through widening of the tax base and toning up of tax administration.

According to Finance Minister, the target of 5.1 per cent of fiscal deficit in 2000-01 has been achieved for the first time in many years. The total expenditure in the budget estimates for 2001-02 is reckoned at Rs 3,75,223 crore of which Rs 1,00,100 crore is for plan. Non-plan expenditure for 2000-01 has been estimated to be Rs 2,49,265 crore. The proposed budget brought cheers to stock market operators. In fact, even before the start of the reading of the budget speech by the Finance Minister many counters reflected on the market’s buoyant tones. By the time the budget was over, the sensitive index of Mumbai stock exchange registered a mark-up of over 4 per cent.

Perhaps the most important factor that helped cheer up the market mood can be identified as the reduction in dividend tax from the current level of 20 per cent to 10 per cent. Relief has been provided in personal income tax and in surcharge component barring surcharge in respect of Gujarat Earthquake Relief Fund. Another factor which boosted the spirits was the announcement made by the Finance Minister that capital gains accruing from sale of shares would be exempted from tax if invested in new public issues.

Year in and year out, almost all automobile manufacturers create an impression that post-budget prices of cars, scooters and motor-cycles are likely to rise. Whatever be the experience of the buyers in the previous years, this time it turned out to be only a sales promotion gimmick, in fact a hoax. Rather than adding higher tax burden on these items the budget has made them cheaper.

There had been a talk of allowing persistent demand from vested interests for import of second hand cars into the country. This suggestion has been accepted in the budget but the incidence of duty is such that the import of such cars will not prove profitable. In any case, people may import these cars for sentimental reasons rather than for the sole aim of making it a source of minting money.

Duty on import of gold has been reduced from the level of Rs 400 per 10 gm to Rs 250. In this respect, the view is that higher duty component induces smuggling of the precious metal. Resultantly, the yellow metal would now be slightly cheaper and a less attractive item for smuggling purposes.

In part-B of the budget speech, the Finance Minister has candidly stated : "In my earlier budgets I have endeavoured to ensure continuity of approach in framing my revenue proposals. The principles that guided me have been the need for growth in revenues, simplification and rationalisation of the tax regime and an effective tax compliance through measures which are friendly for the honest tax payers and a deterrent to the evaders."

He added, "This is a budget for carrying forward the second generation of economic reforms. This is a budget for growth. This is a budget for equity with efficiency. This is a budget for a new deal to the people of India in the new millennium.’’