Home » Indian Budget » Indian Budget 2008-09 » Budget Views from Experts

Economists
"Tax targets appear ambitious as indicated by a modest fiscal deficit. The emphasis on social sectors like health, education and the rural economy do suggest that the budget is leaning towards some populist measures." - Shubhada Rao, Yes Bank, Mumbai

"From the bank's perspective, the waiver of small farm loans in not a negative thing entirely as these were the most stubborn NPAs on banks' loan books." - Rupa Rege Nitsure, Bank of Baroda, Mumbai

"The reduction of the fiscal deficit in '08/09 to 2.5 percent is positive, however it may not include the impact of the pay commission, so it could be higher than forecast." - Shuchita Mehta, Standard Chartered Bank, Mumbai

The finance minister has managed to better the budgeted fiscal deficit target which is a pleasant surprise and bond positive. - A. Prasanna, ICICI Securities, Mumbai

"The government has said that inflation control is a top priority, and that is music to my ears." - Rakesh Mohan, Deputy Governor, Reserve Bank of India

"In fact, reducing the fiscal deficit to a level below the FRBM target could be seen as a measure to try and reduce aggregate demand." - Abheek Barua, HDFC BANK, Delhi

"The increase in short-term capital gains is a bit negative for the capital markets and it could have been avoided as the tax collection figures have been bouyant in the past few years from the markets." - Indranil Pan, Kotak Mahindra Bank, Mumbai

Finance
"It is going to increase the cost of doing business. The commodity transaction tax is going to affect the spread, the day trader and the arbitrageur." - Dilip Bhatia, Director, Kotak Commodity Services Ltd.

"Budget didn't give plans to rein in commodity prices....specially edible oil and pulses … this will affect respective commodity futures." - S. Raghuraman, Head of Research, Agriwatch

"As against expectations there has been no reduction in import duty of edible oils or reduction in value added tax. The edible oil market could now be in a long bullish phase." - Ravi Bhushan, Analyst, ICICI Direct

Industrialists
"The decision on dividend tax will create a depression for few days in the capital markets." - Udayan Bose, Chairman, Lazard India Ltd.

"The Budget provided good inputs for the growth of mid-market hotels with exemptions in expenditure tax and service tax." - Arun Nanda, Executive Director, M&M

"I think it is an achievable and deliverable budget. It is not a disappointment because the expectations were not that high." - Sanjiv Goenka, President, CII

"The Budget proposal to tax dividends in the hands of shareholders and not in the hands of the company will depress the sentiments of the investors." - Amitabh Singh, Director, Ernst & Young

"It has also given a new thrust to infrastructure investments and this should help corporate India gain in competitiveness." - R.S. Lodha, President, FICCI

Politicians
"Today is a very happy occasion. The waiver of loans on farmers by the UPA government is a revolutionary step." - Sonia Gandhi, President, Indian National Congress

"There are good prospects for PSUs... Markets are thirsty for good chips." - Manmohan Singh, Prime Minister of India

“Betrayal of aam admi.” L K Advani, Senior Bharatiya Janata Party leader

"The budget is anti-people." - MP Jual Oram, National Vice-President, Bharatiya Janata Party

"The budget has taken care of all sections of people. It is a historic budget" - Jayadev Jena, State Congress Party President

Aam Admi
"It is a good budget for senior citizens, students, farmers and taxpayers." - Arabinda Mohanty, grocery shop owner, Bhubaneswar

Post Budget Analysts
The Union Budget for 2008-09 offers many a reasons to have a sigh of relief. This was however expected with the elections are lined up next year. Under different pressures, FM had to deal with the populist demands of the members of the UPA.

No, doubt, FM had a tough task to bring out a satisfactory budget amid difficult conditions in the international financial markets and the rising crude oil prices, along with maintaining inflation and keeping in mind the pre-poll expectations. The Budget has proved very lucrative for farmers by relieving them from all bank debts. Though it was not clear if it was decided keeping in mind the views of Radhakrishnan Patel.

However, it is possibly Mr Chidambaram's own decision, in conjunction with the opinions of his party members. Such a relief offered to farmers may have been on account of seasonal conditions, a bail-out operation on this scale is a load on the banks and then finally on the fisc. It also led Government to face the moral dilemma as farmers who had timely paid their dues did not get any relief instead the defaulters got the benefit. Such a step however has been passed out with good intentions but it would also give fume to various defaulters resulting into an reluctance of banks to provide loans for agriculture. But under the strong compulsions of poll politics, Mr Chidambaram had to take such a decision.

Impulse maintained
The Budget, when analyzed completely has been made to keep up the rate of growth. It comprises of several planning measures for the enhancement of both industry and agriculture. Talking about the issue of incentives, FM has taken a very generous step to identify the necessity to offer relief to industries that has got affected due to the appreciation of rupee. As far as the manufacturing sector is considered, some of the indirect tax concessions might prove to be of any help.

Rising rupee
The Finance Minister has made a point to the fact that the Market Stabilization Scheme (MSS) will prove to be helpful in making the exchange rate of the rupee low. This would also be regarded as Government's effort in to combat the issue of rising rupee.

This in fact, would however remain ineffective to win over the importers in other countries whose major concern is the price that they are asked to pay. The Finance Minister seems to ignore the bigger perspective in this regards while asking the industry to be satisfied by the large outlays of the Government on the MSS and its resulting effect in depressing the rupee.

Tax changes
Mr Chidambaram's budget decisions to offer more exemption limits on personal income-tax will allow the individuals to have bit of more money in their pockets. In the same manner, the tax incentives for the setting up of hospitals and hotels in Tier-II cities is a lucrative step. The modifications changes offered in concern to the dividend distribution tax identify the legitimate grievances of corporates, which often have many levels of subsidiaries and undergo many disadvantages.

Finance Minister's plans might have good intentions behind the short-term capital-gains but it is quite likely to leave a negative effect on the equity market. To the extent that FIIs are freed from taxes on capital gains due to their location in Mauritius, this may not affect FIIs much.

Pressure on outcomes
Budget's stress on outcomes instead of outlays is an overwhelming step. This type of stress is the replay of that Mr Chidambaram had made on the 'outcome Budget' during earlier years. It can only be hoped that all such steps included in this budget gets fully implemented.

The schemes that has been planned out in regards of health, education and welfare are well-decided, however the extent for its implementation lies with the States.

The Finance Minister has planned out a new mechanism for institutionalising the monitoring of these schemes. He hopes that such a routine audit by the Comptroller and Auditor General and his assistants will help to carry out the proper implementation of the planned schemes.

Talking about fiscal consolidation, the Finance Minister has put on his efforts to maintain the targets through fiscal deficit reduction and bringing down revenue deficit. Considering the robust tax revenues, better allocation of funds to infrastructure would be a good idea.

When considered on a broader terms, the Annual Budget is quite well-planned that can keep up economy on the growth path along with the people on the side of the UPA.