The finance minister has accomplished a commendable Budget, balancing fiscal concerns and stimulating growth, fully recognising the need to encourage financial savings and to deepen domestic capital markets.
The minister announced a string of measures, including exemption of income tax on interest on saving accounts up to Rs 10,000; doubling of investment limits in tax-free infra bonds up to Rs 60,000 crore; introduction of the Rajiv Gandhi Equity Savings Scheme; reduction of the Securities Transaction Tax and allowing qualified institutional foreign investors to invest in domestic corporate bonds. It is heartening the finance minister has restored the fiscal responsibility and budgetary management path by budgeting for a 5.1 per cent fiscal deficit ratio in financial year 2012-13. Through measures for expenditure management by setting a target on central subsidies at two per cent of gross domestic product (GDP) for 2012-13, this will be further brought down to 1.7 per cent of GDP over the next three years.
In this direction, the initiation of a pilot project for direct cash transfers of mass consumption petroleum products is encouraging. This will potentially improve the efficiency of subsidy targeting. The minister has addressed the funding challenges of key sectors by allowing external commercial borrowing for power companies to partly finance their rupee debt, and to the aviation sector for working capital. This will greatly de-risk these sectors also help the banking sector in the process.
Rana Kapoor
CEO & MD
YES Bank