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  • MODERATOR:

    Hello and welcome!



  • M

    MOHSIN

    What are the hits and misses in the Budget announced by the Finance Minister?

    MADAN SABNAVIS

    On the misses, I think we have not looked at encouraging savings. while we may not want to give benefits or allowances to the middle class, it is essential to provide incentives, as most financial savings come here. Further, no indexation of inflation has been offered to households in terms of tax slabs and exemptions which is required at the micro level. on the hits I think infra spending, rural employment, agri thrust (irrigation and crop insurance), meeting the fiscal deficit, bank capitalization and incentives for pension withdrawals are some that may be mentioned here.


  • V

    VARUL

    What is your view on the FM's proposal for a committee to review the implementation of FRBM?

    MADAN SABNAVIS

    We have had this FRBM for almost a decade now where we have spoken of zero revenue deficit and a move to 3% fiscal deficit target. now that we are moving towards the 3% mark by say FY18-19, we need to figure out what does one do after that. I guess this is why we are having a committee tor review the same. My guess will be that we will look at global clues when deciding on this path. also at some stage we have to take a call on whether a higher ratio is acceptable for growth when conditions demand. so far we have decided to stick to the trodden path.


  • D

    DEEPTI SHARMA

    The budget as it has made almost everything costly - whether it is cinema, cars, readymade clothes, restaurant food for middle-class etc. How do you evaluate the overall tone of the Budget given this?

    MADAN SABNAVIS

    The government has followed the policy of sticking to the FRBM path. then it has followed the policy of providing growth impetus to infrastructure, which we have been clamouring for. once this path is adopted, resources have to be generated and hence this is a cost for growth in future. We have to raise these rates to garner revenue or else we will slip on the FRBM targets. I do agree that this will impact inflation- especially the CPI as these items are of daily use by households.


  • S

    SAHIL

    Is the government overprotecting the start-up culture by creating liberal business rules?

    MADAN SABNAVIS

    Not really. Start ups given their nature require certain incentives and this is what the government is trying to do. I do agree that historically the failure rate for start-ups is high and within 3 years nearly 80% go out of business. this is a risk we have to carry and hence while encouraging them is required, lenders and VCs need to be wary of the same. I would tend to look at the approach towards Start-ups as part of the overall strategy to generate employment, promote different thinking and move towards inclusive growth.


  • T

    TUSHAR KHEMANI

    The government does not seem committed to the PSU banks given the Rs 25,000 crore allocation towards recapitalisation of these PSBs. Do you think that the govt should have allocated more?

    MADAN SABNAVIS

    if we go back to the approach outlined last year, the funding had to come from 3 sources: government capitalization, disinvestment and own resources. presently the situation is tight and hopefully the 25,000 cr will go to the weaker banks. the Indradhanush scheme had spoken of a performance criteria for such allocation, which may have to be changed now given that some are very weak. should the government have allocated more. yes. but there are fiscal constraints and adhering to the 25000 cr mark is pragmatic in these conditions.


  • N

    NINAD

    The budget proposes to invest big in infrastructure and agriculture, specially irrigation. Do you think the initiatives are sufficient to boost rural economy and employment? Also, on banking sector INR 25Kcr may not be sufficient, do you expect any more initiatives besieds budget?

    MADAN SABNAVIS

    on agriculture, we must remember that it is a state subject and hence individual states are responsible for the same. to the extent that it is possible the centre is providing finance. by itself, it may not be adequate but should be seen along with what states are doing- and they are doing quite bit even though here again it is not adequate. As there are budgetary constraints, we have witnessed just 25,000 cr. clearly we need more money to be put in. I would tend to think that divestment will be used for self-capitalization once banks become stronger as today it will not work as their balance sheets are weak.


  • V

    VIKRAM

    Given these Budget proposals and the road ahead of the economy, do you think that the Reserve Bank of India (RBI) will now be enticed to cut back rates, and how soon? What is the quantum of rate cut you expect over the next few quarters?

    MADAN SABNAVIS

    There will definitely be pressure on the RBI to do so given that the net borrowing programme is lower than last year. However, in my opinion as we have targeted the CPI inflation number, logically unless this number changes we should not be lowering rates. But, if it is done, it will clearly be a case of liquidity becoming another factor considered by policy which has not been the case so far.


  • A

    AJAY BAJAJ

    Do you think that the government will be able to stick to its fiscal deficit target and market borrowing program through the year or can one expect a revision as we go along?

    MADAN SABNAVIS

    Yes and no. Yes because they have shown in the past that when there are likely to be slippages, the government cuts back on capex to balance the budget. No, because there are likely to be slippages since we have assumed high growth of 11% in GDP which may not happen. in such a case we will have to roll back the expenditure. therefore, the quality of attaining the deficit is important. Borrowings are not likely to be exceeded as long as the 3.5% mark is held on to.


  • S

    SATHYA

    Why has the government not considered increasing the IT slabs for personal income tax? Is it not good for the middle class growth?

    MADAN SABNAVIS

    Increasing the income tax slabs to my mind should be linked with inflation and hence should be changed every year. however, the government would like to give away little and has chosen not to do so. this is a disappointment as there have been no specific benefits for the middle class which is also the section which pays all its taxes. the government already feels that there are many undeserving benefits like exemptions for the so called rich. therefore, nothing has been done. it is only at the lowest level that they have given some incentives/benefits.


  • MODERATOR:

    Thank you very much for your time and advice. Hope to see you soon.


    MADAN SABNAVIS:

    Welcome


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