The good news in the Budget is there’s no bad news. At 5.1 per cent, the fiscal deficit target wasn’t a surprise, and there’s a welcome move towards fiscal consolidation. The move to increase excise and service tax from 10 to 12 per cent is on expected lines, as is the creation of a service tax negative list. I think the near-term impact of these increases will be manageable. The IT concession is minor, while there’s hope a longer-term plan to increase income tax based on DTC would come next year. Despite fears of a populist streak coming into Budget, the subsidy bill is being controlled at 2 per cent of GDP. The increase in import duty on gold from 2 to 4 per cent will provide additional revenues and, hopefully, increase the movement of savings into more productive assets. The proposal to exempt tax on sale of property if invested in SME is an interesting attempt to push investments into productive assets. The emphasis now needs to be on a credible action plan and some bold decisions to ensure fiscal discipline is maintained and deficit targets are met. Overall, the Budget reflects the pragmatism of the man who presented it.
Amitabh Chaudhry MD & CEO, HDFC Life
