The seeds of the 'feel-good about India' were sowed in Finance Minister Jaswant Singh's first Budget. Singh announced a slew of measures, including tax breaks for parents paying school fees for their children, a new drive to provide healthcare cover to India's poor, and higher tax exemptions for senior citizens. In a sop to the stockmarkets, he also scrapped capital gains taxes on shares and dividend taxes. Interest rates were nudged down further and incentives were given to key sectors like infrastructure, textiles and tourism.

The feel-good factor came via a subsidised food programme for poor families, a new low-budget group insurance scheme with a government subsidy thrown in, and re-instatement of the leave travel concession for government employees.

His tax proposals made cars, air-conditioners, and soft drinks cheaper. He also proposed a 50 paise per litre cess on diesel and petrol to fund the National Highway Development Project. This project envisages the Golden Quadrilateral, highways linking the four corners of India, along with the north-south and east-west corridors. They are among the most ambitious projects under way.

The thrust on infrastructure saw a huge boost in investor confidence and economic growth towards the latter half of the year. After witnessing growth at 5 percent or thereabouts, the Indian economy is now estimated to grow at 7 percent of GDP.

Text: Nandita Mallik

Compete coverage: Budget 2003