The Hindu Business Line : Imaginative legal reforms

An innovative and a progressive step is the introduction of a financial Special Purpose Vehicle to lend money to viable infrastructure projects for roads, ports, airport etc. based on foreign exchange reserves. The emphasis on removal of rural poverty, illiteracy, poor health, and un-employment is pragmatic.

For small and medium industries, the proposal to step up the turnover limit of the preceding year to Rs 4 crore for exemption from excise duty is a welcome move.

The proposal to start a Manufacturing Competitiveness Programme and the direction to banks to give higher and cheaper loans are good. The thrust to increase micro-finance to Self Help Groups is also a socially enriching proposal.

In the background of the progress achieved in the capital market, the proposal to set up a National Institute of Securities Market for teaching and training intermediaries in securities market and promoting research is welcome.

The legal and financial reforms in the cooperative banking sector are imaginative steps to improve rural financial infrastructure.

Thus, banking will be more competitive, convergent and consolidated.

The idea of introducing gold units for as small amount as Rs 100, tradable like units of mutual funds, is visionary that would enhance savings and investment levels. The proposed steps to remove the caps on the Statutory Liquidity Ratio and the Cash Reserve Ratio and allowing the Reserve Bank the freedom to manage liquidity in the economy by repo and reserve repo rates and giving the RBI the flexibility are contemporary moves.

After introducing derivatives trading, it was necessary to exclude trading in these instruments from the definition of speculative transaction for the purposes of income-tax. This would allow assesses to set off loss from such transactions against their income under other heads and from other sources.

However, the Finance Minister has delayed concrete proposals to liberalise foreign direct investment in infrastructure, coal mining, retail trade, and so on.

The reduction and simplification of direct taxes on corporates and individuals are welcome moves. The Minister has brought smiles on the faces of all taxpayers in every bracket by changing the existing slab of income-tax.

The steps to introduce a gender budget and announce more scholarships for Scheduled Castes and Scheduled Tribes candidates were also progressive and positive. Praiseworthy is the proposal to introduce a threshold limit of Rs 4 lakh gross turnover for service providers to get exemption from service tax. This should give relief to a large number of small service providers.

Mr R. Ravi,

President, Institute of Company Secretaries of India

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