Nirmal Jain
Chairman, India Infoline Group For the last couple of months, the market and governance have both been reeling under a negative sentiment. Although most of the gains were reversed on Budget day, I still feel this Budget will go a long way in turning the India sentiment positive. While the stock market performance will depend a lot on FII flows, which in turn will also depend on global developments, the finance minister has taken several positive steps to promote a higher flow of capital by way of equity as well as debt. The lower fiscal deficit target should ensure that private investment is not crowded out and the growth momentum is sustained. I am personally enthused by the minister’s boldness in keeping indirect taxes at the same level.
Raamdeo Agrawal
Joint MD, Motilal Oswal Financial Services
After a long time, we have a Budget without many surprises. This Budget has focused on pending legislative reforms. Direct and indirect tax proposals have been very few and largely revenue neutral. Finance Minister Pranab Mukherjee has set his sights on implementing the direct tax code and GST from April 1, 2012. If implemented, these reforms may go down as among the biggest since the de-licensing of industries. Markets will eventually take a view on the quality of earnings and the discount rate. With foreign nationals now allowed to invest directly in Indian mutual funds, the FM is signalling that the foreign capitalist is welcome. All in all, 2011-12 should be a good year for equities.
Ashok Wadhwa
Group CEO, Ambit Holdings
By setting a fiscal deficit target of 4.6 per cent for FY12, the FM has taken upon himself the task of delivering a divestment target of Rs 40,000 crore while controlling expenses. This would include managing subsidies, which could jump due to the political instability in oil producing countries. Allowing foreign nationals to invest in Indian mutual fund schemes might not have a major impact on the monies already invested by FIIs, as re-routing will have tax implications. However, this could well act as a new calling card for mutual funds for selling India as an investment destination.
Rashesh Shah
Chairman & CEO, Edelweiss Group
The Finance Minister has forsaken the big bang approach in favour of a more incremental approach towards economic policy making. There were huge expectations in areas like fiscal consolidation, tax reforms, financial sector reforms, infrastructure development and action on corruption. On almost all these fronts, he has decided to take a cautious, but perhaps more nuanced, approach. The fiscal deficit as well as net market borrowing numbers are surprisingly low. The FM hopes to peg the deficit in FY12 at 4.6 per cent of GDP and has budgeted for net borrowings of about Rs 340,000 crore. At first glance, both estimates seem overly optimistic. But read between the lines, and perhaps what he is signalling is that at some point during the year, maybe post the state elections, he would look at doing away with administered pricing for diesel and kerosene. That would definitely reduce the subsidy burden.
Vallabh Bhanshali
Chairman, ENAM Securities
By not rolling back excise and customs duties, the FM has continued with the growth stimulus. This is the key to growth that will determine the outcome of spending on critical social schemes as well as infrastructure. The FM has surprised positively by raising the FII limit in corporate bonds to $40 billion and permitting foreigners to invest in Indian mutual funds. This can bring in a lot of money, depressing long-term interest rates over a period of time. While the Budget’s impact on the market is over, unless something comes out after reading the fine print, it has now become a long-term buyers’ market. This is not a market for those into fishing at the bottom. Improvement in the primary market could also follow. However, all the stakeholders, including regulators, will have to work hard to talk up the investment climate.
