Bangalore, February 29, 2008

The overall macroeconomic indicators continue to show improvement and the Union Budget 2008-09 has clearly reinforced the strong image that India will attain on the world economic stage. The FM has put together a well balanced, pre election budget with a keen focus on the 3 pillars on which the Indian economy is dependent: Agriculture, Education and Healthcare. A fourth pillar viz Infrastructure, has also been addressed albeit not with the same visible emphasis.

The Rs. 60K crore loan waiver to farmers is seen as an open-ended concern as the FM has not clearly articulated how the exchequer plans to fund this. A $15 billion write off doesn't seem unreasonable in a trillion dollar economy. However, I think the FM could have formulated a more innovative instrument to link this loan waiver with co-operative farming and technology upgradation. Merely writing off the debt has a clearly electioneering motive whereas a more innovative loan waiver could have provided a true value add to agriculture.

The healthcare sector is a major beneficiary of Budget 2008. India's emerging role as being the preferred destination for drug development coupled with an increasing need to bring down drug prices have been the key factors in this year's budget SOPs. The sops have come as a pleasant but welcome surprise and have more than met industry expectations. An 8% reduction in export duties along with export duty exemption for indigenous Life Saving Drugs and 5% Customs Duty reduction for imported LSDs will certainly reduce drug prices. This is a better way to address healthcare costs rather than drug price control. Perhaps the most important tax benefit announced for the sector is the 125% Weighted average tax deduction on outsourced R&D, which sends a strong signal of the potential that discovery research holds for the Indian Pharma and Biotech industry.

Talent and skill building has also received due attention. INSPIRE is a good initiative which if implemented well will have a significant value add to our talent creation efforts.

Finally the concept of gender budgeting is a welcome initiative, which will have positive societal impact

Rating. Overall : 7.5/10
Sectoral (Healthcare): 9/10