The Union Budget for 2001-2002 represents an aggressive march forward on the reforms front. It will certainly help revive economic growth, even while advancing fiscal responsibility.

The broad policy direction implicit in the Budget is in line with the dictates of making India competitive in a global economy. The Excise Duty structure has been rationalised around a single rate of 16%. The 10% Customs Duty surcharge has been abolished.

On the direct tax front, the surcharge on the highest slab has been slashed from 17% to 2%, which results in a reduction of 4.5 percentage points in the effective tax rate. The tax on dividends paid has also been halved - to 10%. These measures will benefit every sector. With these changes, the distortions built into the direct tax structure over the past few years - through creeping surcharges - have been done away with. Most important, the cut in the surcharge will instill confidence - that a temporary measure is indeed temporary. The move to do away with the long-term capital gains tax - if the proceeds are reinvested in the primary market - is an innovative measure.

Economic reforms have put back on the fast track. The 1.5 percentage point cut in the interest rate on small savings will contribute to lowering the budgetary gap and should reduce the cost of finance right through the economy. The disinvestment process should also get a boost. Rs 12,000 crore has been targeted by way of disinvestment proceeds and 8 public non-viable sector units have been identified for closure. A clear statement has been made that disinvestment is not to be merely a revenue generating exercise, but will be guided by strategic considerations.

Measures to liberalize the capital account regime - hiking the limit for foreign investments through the automatic approval route, by enabling block approvals for larger amounts, by permitting two-way fungibility for GDRS and ADRs and enhancing the scope of ESOP schemes - are indeed welcome. Banks have also been given grater autonomy and a slew of measures have been proposed to boost the debt markets.

The infrastructure sector should also get a strong boost, through steps that promote housing, the building of a nationwide highway network and the corporatisation of ports and airports. For the first time, the Budget brings into sharp focus the need to levy adequate user charges for the services the public sector provides. The impact of this can be huge, particularly in the power sector, where the SEBs are saddled with massive outstandings. Meaningful progress in this area can bring about a sea change in the Government's financial position and we hope that these intentions are speedily and effectively implemented. This problem is absolutely central if India is to develop a world-class infrastructure.

The Budget also greatly facilitates Indian businesses to rationalize the labour force, while providing for an enhanced safety net to workers. It is also commendable that specific steps will be taken soon to downsize the Government.

Social and human issues have also been accorded the higher priority they deserve. Boosting primary and technical education, increasing the access of students to loans for studies in India and abroad, and empowering of women - all will go a long way towards raising our Human Development Index.

All in all, this is a forward-looking Budget, with a human face as well. It addresses the immediate objective of kick-starting the economy, makes a beginning towards restoring fiscal soundness and puts India back on track to meet the challenges of globalisation.

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