The right social touch

BUDGET REACTIONS

Gunit Chadha
MD & CEO Deutsche Bank
India

One must applaud the Budget as demonstrative of the government's progressive stance on reform, with the right social touch. I believe the balance is well met, without seeking to fix-something-when-it-ain't-broke.

It is a budget which recognizes the India Shining theme of the Economic Survery, and has restricted itself to changes at the margin, for better resource allocation and tax governance.

The finance minister has clearly laid out the goal of 7-8 percent growth in GDP, notwithstanding the enhanced social spending, which as a citizen of India, one whole-heartedly agrees with.

The increase in FDI limits for telecom, aviation and insurance are a strong indication of the pro-reformist stance of the goverrnment.

A rather significant outcome was the increase in the FDI limit to 49 per cent in the insurance sector. If infrastructure funding is to come from the private sector, it is necessary to develop a vibrant market for long term bonds.

These funds can mainly come from the insurance sector which collects premium on a long-term basis. The injection of more FDI in this sector will help attain this objective.

Even the announcement of a secondary sale of 5 % stake by the Government of India in the NTPC public issue is a strong indicator that the government will continue to dilute its stake, thru capital markets, in profitable public sector undertakings.