Industry & Economy
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Budget
Growth scores over fiscal discipline
The Budget ensured growth at the cost of delayed fiscal consolidation. The Government has taken some steps towards fiscal reforms by eliminating some irritant taxes (FBT, CTT) benefiting the industry, a clear roadmap for the roll out of GST, and broadening the service tax area.
However, increase in MAT to 15 per cent was a bit unexpected negative for the corporate sector.
The Budget reminded financial markets once again that focus of the Government will be on Aam Aadmi and on right execution of expenditure on education, healthcare and infrastructure, so that every single citizen will reap the demographic dividend; otherwise income disparity and gap between poor and rich will become wider.
Roll out of GST by April 1, 2010, was a positive surprise for the market. Also a number of steps such as removal of surcharge on tax and FBT, and increase in exemption limits will add extra income in the hands of consumers.
However, the Budget was short of expectation on disinvestment, decontrol and deregulation, which was the focus area of economic survey. The laxity on the fiscal deficit was also a disappointment. A higher than expected fiscal deficit also impacts investment cycle recovery.
In my view, the Finance Minister has opted for growth over fiscal discipline to achieve long-term growth-oriented economic benefits.
Vikram Kotak,
Chief Investment Officer, Birla Sun
Life Insurance
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