Union Budget 2007: Experts give their views

PH Ravikumar says that India cannot sustain a growth rate of 9-10% unless agriculture grows at 4%. He feels that not much is done to improve investments in agriculture. "There has to be facilitation of private investments in agriculture, nothing has been heard on it" he says.

He feels that lot of positive steps by the FM has been taken but the problem of wheat and edible oils were not addressed because India is commodity inflation. "I believe short selling, setting up of mortgage guarantee companies which should also benefit the rural side housing build up as well as exchangeable bond are very positive for markets" he adds.

Jairaj Purandare welcomes the customs duty peak rates being dropped. "It appears that there is no change to the basic structure of capital gains tax other than one particular change in the context of gains limited to 15 lakh," he says. Though it was a relief to have no change in the service tax the fringe benefit tax on ESOPs (Employees Stock Options) clearly was not quite expected, " I think that the dividend distribution tax going up to 15% is going to be a cause for concern specially because this is effectively a multilayer tax" he adds.

Nimesh Kampani, Chairman, JM Morgan Stanley gives his perspective on the capital gain tax, "On the positive side, I think he (P Chidambaram) has brought in short sales to be allowed which can stabilize the market when the market is in a high gear and people selling it and then they can be natural buyer at lower prices, lending and borrowing of the stock is also allowed now. So I think that the institutional investors will be able to do that very clearly. Hence, for the corporate sector, specially for the large institutions like LIC or institutions like mutual funds and also one of the promoters, the Finance Minister has agreed to do a exchangeable bond."

In his view, this is a fine instrument where the promoters will be able to take a greater risk and put a lot of further money into newer project. So this as a signal for a growth where the funding by the promoter is done simpler because today, Indian promoters are not able to raise resources except outside of India against their shares. So the legitimate way of raising money from capital market through the funding of the promoters’ holding.

On the health front, especially on R&D, the Budget has proposed an exemption for 5 more years. Dr Swati Piramal of Nicholas Piramal responds to this, " It's sunrise for the pharma sector because we are the torchbearers of the innovative economy. India is really becoming the leader in the biopharma sector so that is exempt from service tax, we are delighted with that. Its increased healthcare spending, which is long time coming, we wanted to increase from 1% to 2% and it’s a small beginning, even though it’s a large number, but its still small compare to rest of the GDP. So healthcare spending has increased and we are very happy with that, and clarifications of free samples to doctors in the FBT (fringe benefit tax) that’s the other area where he has clarified things. So thank you Mr. Finance Minister for R&D."

Naseer Munjee, Chairman of the Development Credit Bank gives his view on the infrastructure sector. He says, "As far as the critical element for the future, in my view is public-private partnership and not in the way the government interprets. India needs to privatize, commercialize as well as to look at output-based contracts, those areas in which revenues, user charges cannot be used. I don’t see that strategy at all, it as even emerged while most countries in the world are moving headlock in that direction. We need to be leveraging public money with private. I do not see that happening in the Budget, I was hoping that we would see that. The way government spends money has to change."