CAPITULATING to unrelenting pressure from stakeholders affected by his stringent budget proposals, Finance Minister Pranab Mukherjee has rolled back some while delaying implementation of others, notably the anti-tax evasion provisions popularly called GAAR (General Anti-avoidance Rules). The pressure brought to bear by angry investors and traders, depressed stock markets and a rupee in free fall was probably too much to bear. Mr. Mukherjee must also have been conscious of the importance of foreign portfolio flows to bridge the widening current account deficit, estimated to be around 4 per cent for 2011-12, while deciding to defer the implementation of GAAR until the next financial year. These were a red rag to foreign investors, some of whom held back fresh investments in the period since the budget. The facility of seeking advance ruling on GAAR provisions is also a welcome step as investors can plan their moves better.

The jewellers’ lobby also seems to have won with Mr. Mukherjee doing away with the 1 per cent excise duty that he imposed on non-branded jewellery. It is a double bonanza for the trade because branded jewellery will also be exempt from the levy now. One proposal on which the Finance Minister has not succumbed, though, is the retrospective clarification that will bring the Vodafone deal to tax. The case might well return to the Supreme Court but the government has held firm, which is notable indeed. It is also not clear what impact the rollbacks will have on the revenue side of the budget arithmetic. If in the end, they lead to better sentiment and consequently higher GDP growth, their purpose might have been served.