The finance minister has presented a realistic and balanced Budget. The gross domestic product (GDP) forecast for 2012-13 at 7.6 per cent is optimistic, but not unrealistic. The fiscal deficit at 5.1 per cent is credible, though the need for further fiscal consolidation persists.
He has rightly articulated the need to examine the possibility of setting up of a financial holding company to raise resources to meet the capital requirements of public sector banks. While critics felt the minister fell short on measures to curtail subsidies, he should be given credit for laying out a limit of restricting subsidies to two per cent of GDP.
Similarly, concerted efforts are being made to contain black money and bring it within the tax ambit. Housing has rightly been a focus area. The Rs 5,000 crore tax free bond limit will help National Housing Board (NHB) refinance more home loans. For borrowers, the extension of the interest subvention scheme is a welcome measure. One would have hoped the limit of deduction of interest paid on a housing loan would have been increased from Rs 1,50,000. The increase in excise and service tax is marginally inflationary for home buyers, but is understandable given the revenue constraints. The increase in the tax exemption limit and readjustment of tax slabs will put more money in the hands of common man, boosting consumption and savings. The proposed equity savings scheme and reduced STT will encourage more retail participation in the market and the savings account interest exemption up to Rs 10,000 will help households.
Keki mistry
Vice-Chairman & CEO
HDFC
