New Delhi: The forthcoming budget is important for the second administration of the Manmohan Singh-led UPA government as it would set the tone for the five-year term of the government, which has won a decisive mandate in the recent general election, says Subir Gokarn, chief economist of Standard and Poor’s Asia-Pacific.
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Gokarn says things are looking up for India in terms of macro economic growth following the interim budget earlier this year, despite the liquidity squeeze--a direct result of the global economic meltdown. He says though businesses will take until 2010 to recover, inflation has been softening since the first business quarter of 2009.
According to Gokarn, the current fiscal situation has improved considerably and that the government should make use of this situation to gain control. He says investors must not lose confidence in India and it should be an attractive business opportunity for them to invest resources in the country. There is no room for additional government spending, according to him.
The tax situation in the country is in equilibrium and not much change is likely, says the chief economist. Gokarn says there could be a marginal change in indirect taxes and the GST coverage would change to 14%.
The only worrying factor according to Gokarn is that oil prices are shooting up and other commodities too will follow suit. He says the government must also create NREGA like schemes for blue collared workers to tighten the social safety nets.