The overall economic growth had decelerated significantly during 1997-98 with the GDP registering a low growth of five per cent. Industrial production has grown by only 4.2 per cent as compared to 7.1 per cent growth in 1996-97.

One of the prime reasons for this slow down was the dwindling investments, particularly in the infrastructure sector. Under these circumstances, I think the Finance Minister has done a good job and initiated steps which will certainly help in early revival of the economy. The plan allocations for many important sectors of the economy have been increased.

The Finance Minister has announced many concessions for the infrastructure sector, particularly for housing. The allocations for energy, transport and communication have been increased by 35 per cent to Rs. 61,146 crores. The planned outlay for the power sector is stepped up by 40% to Rs 10,500 crores. The tax benefits for the power sectorhave been extended upto 2003.

This will help revive the construction industry which in turn will benefit the allied industries like steel, cement, etc. Opening-up of the insurance sector for domestic private companies and permission for the 10% of the new accrual of provident fund monies to be invested in infrastructure projects, are moves on the right direction. These steps will, over a period of time, help improve the infrastructure and also revive the industrial scenario in the country.

The Finance Minister should also be complimented for retaining the present structure of individual and corporate tax rates.

The announcement relating to non-modvatable special duty of 8% to provide level playing field to Indian industry is a right step. However, it seems that this will not be applicable to the capital goods industry. The capital goods industry is already reeling under tremendous competetive pressure from imports and was looking forward to some relief in this budget.

The announcements related to thedisinvestment of IOCL, VSNL and CONCOR are indeed welcome. For the first time, it has been stated that the government intends to progressively reduce its stake in PSUs to 26%. The move to make the VRS scheme for the sick unit more attractive, will help in expediting the closure of terminally sick units.

The author is MD & CEO, Larsen & Toubro Ltd