I have a slightly different view on the Budget.
While it is alright to say the finance minister could have done more from his perspective, I think it was important for him to prioritise. It would have been easy for him to make many announcements but it would have been spreading himself too thin. It is always better to spend money to get optimum returns.
Infrastructure, power, manufacturing and agriculture clearly emerged as some of the focus areas, and rightly so, as they are the growth drivers if India has to sustain its economic growth. He has estimated the fiscal deficit at 5.1 per cent for financial year 2012-13 and it is generally in line with our expectations.
The finance minister has also indicated the government’s intention of introducing foreign direct investment (FDI) in multi-brand retail in consultation with states.
Another positive was the approval of the goods and services tax (GST) structure by states and implementation by August.
While the market reaction to the Budget has not been too positive, measures like introduction of the Rajiv Gandhi Equity scheme and reduction in the securities transaction tax (STT) should be positive for the markets. Direct access to the corporate bonds markets for qualified foreign investors will also help deepen the market and allow offshore investors to purchase bonds and invest more.
There are a few other measures he mentioned in passing and,therefore, did not get the due attention. But taking up the various financial sector bills pertaining to the banking and insurance sector, enacting laws for the microfinance sector, priority sector guidelines, etc. will have a far-reaching impact.
Stuart Davis
CEO
India, HSBC
