"The most important aspect of the budget is the tax reforms. This is the most courageous direct tax reform in the last 7 years to encourage spending and savings, which will fuel growth," he told industry captains at a FICCI meeting.
Though there was a "dark cloud" on the economy soon after UPA assumed office last year with spiralling inflation and deficient rainfall, he said "at the end of the fiscal year, thanks to UPA's policies under the leadership of Prime Minister Manmohan Singh, we have an inclusive growth of near 7 per cent."
With declining inflation, high growth in non-food credit, exports and imports, he said "this is the time for India to move forward with great confidence."
The Budget was aimed at reforms that would lead to growth with equity. "Our approach was two-fold -- provoke investment in infrastructure and keep the engine of growth humming and rolling and ensure that the benefit of the growth reaches all sections of the society particularly the poor and vulnerable in rural India."
Asserting that Budget would spur investment, he said "we decided to stick to the reform path and engage in nothing that will douse the spirit of entrepreneurship."
Unless growth momentum is maintained, he said "we will not have enough headroom to spend more. Growth alone will enable us to spend more."
Assuring that pro-investment tax regime will be maintained, he said corporate tax rates will be "stable" in the next 4-5 years so as to stimulate growth. "We will not tamper with it," he said.
He said Budget has struck a balance between all types of corporates -- big and small. "All companies got a balanced tax structure."
Referring to the changes in depreciation norms, he said the government assessment shows that internal accruals at the end of 5 years will be same as in the previous regime. All companies will have the "matching money" to replace their machines, he said.
Chidambaram also said that government has accepted India Inc's demand of credit facility for payment of Minimum Alternate Tax and reducing the withholding tax.
On the income tax front, he said "People in every tax-bracket is a gainer. When we gain, we spend and save more. It is higher spending and savings, that will fuel growth."
Appealing to housewives, who will have more money in hand following the hike in income tax exemption and savings limits, Chidambaram said "Spend 60 per cent and save 40 per cent of the gain."
With higher savings, the Finance Minister expects more funds flowing into the booming capital market, which would increase its depth.
On the indirect tax front, he said the Budget has attempted to bring Customs duties to ASEAN levels and rationalise excise duties to move towards the single Cenvat rate of 16 per cent, while extending the service tax net.
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