Pravind Jugnauth has kept his promise. His first budget was his own and his will to be different from both his father and the previous Finance minister may pay dividends. His presentation, social and human, had nothing to do with the technical and ?cold? approach of his predecessor.

Fifteen months from the next general elections, the Finance minister has banked on the social side rather than the economic one. Although some may feel that his budget is a bit incomplete ? investment was hardly brought up ? it should be conceded that he has succeeded in satisfying the population on the whole. A political exercise finally. According to Grant Thornton?s study group, the 2004-2005 budget speech ?is more like a cameratic governmental programme ranging between a series of diagnoses, intentions, proposals and decisions.?

Professor Lamusse, the economist and university management lecturer, stated in an interview before the budget: ?In the present context, Pravind Jugnauth should favour the social side since a large proportion of the population really needs it.?

Actually, the budget was made in a difficult economic context and there has to be a national effort towards ?discipline? and ?rigour? to face the future. However, there is no question of making the poorest pay more. The budget falls within a social framework and the needy should be offered help.

The readjustment of tax thresholds aims at lightening the tax burden for low-wage earners while increasing it for high-wage earners. An employee whose taxable income is less than Rs 25,000 a year will pay less tax than before while those earning more than Rs 500,000 will have to give practically a third back to the State. According to observers, it is a clever approach since ?he may have the support of people of modest needs and embarrass the richest, who will not dare grumble.?

Companies making huge profits have not been spared by the social measures of the budget. An Alternative Minimum Tax on companies will be introduced in order to fight the fact that ?many companies make huge profits, distribute substantial dividends to their shareholders, yet do not pay any tax at all.?

But this ?ideological? budget is far from pleasing everyone. Opposition leader Navin Ramgoolam believes that ?the government failed regarding its four priorities: fight against unemployment, reduction of budget deficit, reduction of public debt and rise in the investment rate.?

Although economist Pierre Dinan disagrees with the idea that this budget will put an end to the Welfare State ? Navin Ramgoolam?s first reaction to the budget ? he nevertheless concedes that this budget is disappointing regarding one specific measure (or non-measure?): the budget deficit. He makes it clear that, although it was announced that the budget deficit would go down from 5.6% to 5%, it still remains high. According to him, ?budget deficit has to stay under control.?

Likewise, other observers think that Pravind Jugnauth has gone off the point with his budget: ?He left the real stakes of a budget aside.? It is a must: investment has to be boosted in order to create wealth in the country. Both local and foreign investors have to be convinced that Mauritius is the best place to invest their capital. However, it seems that this budget does not show the political will to reach this goal. Pravind Jugnauth has hardly touched on the investment issue.

PricewaterhouseCoopers analyses the fact that the budget can be considered as ?a fair and reasonable balancing act? but it has economic holes. ?There are no business incentives and few growth-inducing measures likely to stimulate investment and job creation, outside SMEs (...) Industry, ICT and financial services were barely mentioned.?

The private sector has expressed mixed feelings on the budget. They are happy that efforts have been made to favour Small and Medium Enterprises but do not really understand why the budget does not contain incentives to boost employment and investment. The lack of incentives for job creation has also been heavily criticised by trade unions. They have blamed the minister of Finance for ?putting an end to the Welfare State.?

We cannot acknowledge, as the opposition intends to show, that this budget was an ?incoherent and confused speech.? The main idea was the fact that the government?s priority was to help the less privileged people and this is a positive step. This first budget speech is a credit to Pravind?s political career. However, he may have tried to be too ideological and forgotten economic priorities. The stakeholders are waiting for more?

Major measures

TRAINING

Two specific categories have been targeted for training: people without the Certificate of Primary Education and those interested in working in the ICT sector. Some Rs 300 million will be allocated for the training of 3,000 persons who do not have the CPE and 5,000 with School Certificate or Higher School Certificate aiming at studying ICT. The Industrial & Vocational Training Board will benefit from an additional amount of Rs 165 m. Moreover, 100 students will go to Infosys campus in Bangalore and the best will be employed by Infosys Mauritius.

AGRICULTURE

Rs 40 million has been allocated to the National Biotechnoloy Institute to allow export of goods corresponding to European norms in the context of the Non Sugar Sector Strategic Plan. A food technology laboratory will be set up at the cost of Rs 60 million. Although sugar must not be abandoned since many planters still depend on it, strategies to diversify have to be gradually adopted.

LANDS

Democratising the economy has been one of Pravind Jugnauth?s top priorities. As a result, the government is implementing measures to help all citizens to own a plot of land. The Employees? Welfare Fund (EWF) will invest Rs 350 million in the Real Estate Investment Trust. This will allow 325,000 persons to own a plot of land with high development potential. The drop in duties on iron bars and the increased subsidy on slab casting are other measures aimed at helping more people to have their own house.

FISHING INDUSTRY

The seafood hub, which is expected to create 1,000 new jobs, will benefit from a development grant of Rs 500 million. The hub involves the creation of a freight transfer centre, a processing and stocking unit for reexporting goods and top-quality seafood delivery. The government also intends to create a one-stop shop in Mer Rouge.

HEALTH

Measures that would lead to a 13.5% drop in prices of pharmaceutical products have been announced. These goods will be the subject of a 5% decrease in customs duty and exempted from Value Added Tax. Moreover, the budget plans a 10% drop in the price of controlled products. Rs 40 million have been earmarked to fill 650 vacancies in hospitals.

INDUSTRY

The restructuring of the textile industry with further development of the Textile Emergency Support Team (TEST) is going on. Moreover, small and medium enterprises will get government?s support, the aim being to democratise the economy. SMEs will benefit from an extended investment allowance if they invest in new technologies or in expansion projects. The aim is to support any effort towards modernisation.

LAW& ORDER

The police budget is increasing by 17% thus reaching Rs 2.7 billion, of which Rs 80 million will be devoted to the purchase of vehicles and equipment. There will be 700 more recruits to improve public safety. New police district headquarters will be constructed at the cost of Rs 33 million. The police will also be equipped with two new helicopters costing Rs 20 million.

Although some may feel that his budget is a bit incomplete ? investment was hardly brought up ? it should be conceded that he succeeded in satisfying the population on the whole. A political exercise finally.