A growth-oriented Budget: M D Mallya

The Budget has made an earnest effort to deal with the slowdown. Tax exemption on interest earnings on savings accounts and the Rajiv Gandhi Equity Savings Scheme augur well for enhancing the household sector’s savings. Measures taken to benefit the agriculture and infra sectors and liberalisation of FII investments in long-term infra bonds and ECBs for power firms should improve the investment climate.

Creation of a financial holding company to help banks raise funds and the provision of capital support to the extent of Rs 15,888 crore to PSU banks in 2012-13 will ensure lending to productive sectors will continue well. This will facilitate smoother migration of these banks to more advanced risk-management frameworks. Another positive measure pertains to the educational sector, where the Budget has proposed to allocate Rs 52,057 crore, a rise of 24 per cent over the last year. Moreover, it has also proposed a Central Credit Guarantee Fund for students to help them get education loans easily. This is beneficial to banks also from the risk management perspective.

The target of 5.1 per cent for fiscal deficit to GDP ratio is realistic, given the developmental commitments of the govt. Yet, there has been a genuine effort in the raising of certain indirect taxes and the widening of the service tax net, which should help improve the government’s revenue generation.

M D Mallya
Chairman and Managing Director,
Bank of Baroda