Mr Narayan S.A., Director, Kotak Securities:

“The net borrowing target of Rs 3,43,000 crore, lower than what the market expected will help in moderating the pressure on interest rates which is good for the industry and the equity market. Increasing the limit of FII investment in corporate bonds and Infrastructure bonds are steps in the right direction to improve liquidity in the market and make funds available to the corporate sector. Allowing the Indian Equity Mutual Funds to source funds from foreign investors is good for the growth of the Indian Mutual Fund industry and will also result in higher flow of foreign funds into equity markets over a period of time. Stand alone, while the budget is positive for the equity markets, other factors like the crude oil price and the global scenario will largely decide the direction of the market in the medium term.”

Ms Deena Mehta, MD, Investment Interrmediates Ltd:

“Stock markets have been highly dependent on foreign funds in the last decade. The budget has laid the foundation to increase this flow in the country multi fold. Foreign nationals as well as FII can now invest in Indian markets through mutual funds. This will be through the Portfolio Investment Scheme route for individuals and in case of FII current mechanism will be used. This is a major step to revive the markets since the mutual fund investments are more attractive than direct investing due to tax incentives on dividend distribution as well as expertise available in investing. The readiness of banks to channelise the money of foreign nationals is doubtful.”

Mr Nikhil Kapadia , Chief Executive Officer — Wealth Management, Avendus Capital:

“Whilst a vibrant capital market is essential and the DTC will address capital gains tax the FM should have removed the uncertainty on the same. Markets will be vulnerable to a sudden withdrawal of capital gains tax. The FM should have announced an amnesty scheme for black money as there could be never a better time to tap such resources.”

Mr Tushar Pradhan, CIO, HSBC Asset Management (India):

“I think, overall, the budget has continued the course it had set itself in the last year, trying to encourage growth in the economy while ensuring that this growth shall remain equitable for most sections of the society. While there are no major positives in the budget that qualify for special mention, nor are there significant negatives to talk about. However, what is clear is that the projected fiscal deficit is much lower than most expectations. As always, the devil is in the details and we will look to see the fine print before commenting if the proposed numbers are indeed achievable. Gross borrowings too are projected to be lower in the coming year and no major allocation of expenditure has come in the form of new taxes.”

Mr Ridham Desai , India Strategist and Head of Research at Morgan Stanley:

“Central Budget has not done anything dramatically wrong. It provides incentives to increased infrastructure spending along with increased funding sources, highlights supply side issues in agriculture with an effort to provide solutions, creates avenue for funding of the current account deficit (albeit still capital market linked), creates a road map to rationalise subsidies, moderates expenditure growth and takes another small step towards the implementation of DTC and GST.”

Mr Saurabh Mukherjea , Head of Equities, Ambit Capital:

“Post November 2010, markets had been in correction mode largely on account of the political stalemate and a halt in the economic reform process. Despite the fact that expectations were pitched at a low level for the Union Budget for FY-12, the Government failed to leverage this stellar opportunity with the broader reform agenda remaining unaddressed and fiscal consolidation being the only clear positive.

The lower fiscal deficit number for FY-12 too was delivered by replacing the absence of the 3G auction lever with higher tax revenue, whilst the increased allocation towards revenue expenditure was managed by cutting back capital expenditure. Add to that the higher nominal GDP for FY-12 and the result is an automatic reduction in the fiscal deficit as a percentage of GDP. What's more, the budgeted level of subsidies for FY-12 appear suspiciously low and will impose risks for the overall fiscal deficit metric unless diesel price deregulation is pushed through.

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