Indian Union Budget
NEW YORK, July 8, 2009—Two days after India’s highly anticipated annual
budget was unveiled, analysts offered an audience of eager investors
and academics an optimistic look at the nation’s economic prospects but
expressed some doubts.
“India is now one of the bright spots in a bleak economic landscape,” said Arun Kumar, partner at KPMG’s US-India practice, who moderated the discussion.
Dr. A.M. Gondane, Deputy Consul General of India in New
York, said the budget “was a deliberate attempt on the part of the
government to boost private consumption, which had come down
precipitously.” He said the budget was just one of the many ways reforms could
place under the new government.
K.R. Garish, partner at KPMG India Tax & Regulatory
Services, expressed concern over a projected fiscal-year interest
burden of 22 percent but praised efforts toward initiating a Goods and
Services Tax (GST).
While admitting several challenges, Lalit Ahluwalia, CFO of
Ranbaxy North America, agreed initiatives such as a GST, taxes on coal
gas chains, and infrastructure expansion would all benefit corporations
looking to invest in India.
T.N. Srinivasan, economics professor at Yale University, was
more critical. “I am not persuaded that given the difference in India’s
economic structure that this is the way to go,” he said. “China’s
fiscal situation is far better.”
He said the budget lacked innovation and that more long-term attention
needs to be paid to land reform and labor-intensive manufacturing.
Like Srinivasan, Parag Saxena, CEO of New Silk Road
Partners, had hoped that several of the budget's proposals would have
gone further, citing weaknesses in educational infrastructure, dispute
resolution, and mechanisms for aiding enforcement.
Saxena said the budget left one critical question unanswered: “How are we going to pay for this?”
Reported by Zach Balin