Media Release

Mangalore, Mar 27: The union budget-2012 is timid, ineffective and will not promote growth of the Indian economy, observed Gerard Colaco, partner, Colaco & Aranha. He was speaking on the budget at a meeting organised by St Aloysius College Alumni Association (SACAA) on Monday March 26 at the college campus.

Supported by power point presentation, he explained that there are no reforms, merely tweaking of direct tax laws and across-the-board increases in service tax and excise duties, which will lead to a rise in prices.

Colaco said that the fiscal situation is deteriorating and nothing in the budget is going to improve it. The government hopes to earn Rs 9,77,335 crores in 2012-13 and will be spending Rs 14,90,925 crores.  The shortfall of Rs 5,13,590 crores will be met by borrowing.  This fiscal deficit can send India into a vicious cycle of high interest rates, lower corporate and individual earnings, lower spending, lower consumption, lower demand, and consequently lower tax collections, with no corresponding reduction in expenditure.

According to Colaco, an undesirable side effect can be lesser jobs for India's burgeoning young population. External factors such as high oil prices can upset the applecart further. In 2007-08, India's GDP growth rate was 9.3%. Understandably, it fell to 6.7% in 2008-09 because of the Global Financial Crisis.  But, in the next two years, GDP growth rallied smartly to 8.4%.  This resilience of the Indian economy should have been capitalised upon by a relieved government. A slew of reforms should have been announced and implemented, which would have propelled India to the world economic centre-stage. 

Colaco said that the token tinkering with direct taxes will help no one, because whatever gains accrue to individual taxpayers and householders will be more than offset by price rises brought about by increases in service tax and central excise. The 'giveaways' under direct taxes of Rs 4,500 crores are taken away by the net increase in collections sought from indirect taxes, which  is Rs 45,940 crores.

Concluding, Colaco said that this is a lack-lustre and ineffective budget, which will harm the economy by its sin of omission to do anything constructive and visionary.

Arthur D’Souza, president, Naveen Mascarenhas, secretary, SACAA and John B Monteiro, convener, SACAA talks, were present.