“Based on a preliminary reading of the Budget speech and information available, this appears to be a well-balanced and progressive budget, with the most striking feature being the fact that fiscal prudence has been maintained without compromising on developmental expenditure. Fiscal deficit being contained at 3.9% for current year and further brought down to 3.5% in the budget, gives a lot of confidence to the market.
The emphasis on rural and social sectors is evident with significant investments in irrigation, health care, rural road infrastructure, crop insurance, MNREGA, and an all-time high target for agricultural rural credit. Moreover the emphasis is on enablement rather than dole-outs.
Infrastructure development and power generation will make the country more efficient and attractive for investments. Significant investments in education and skill development are directed towards harvesting the demographic dividend. Attention has been paid to encouraging start-ups and increasing the ease of doing business.
Financial sector reforms have been given an impetus with bank capitalisation as well as creating enablers for banks to recover stressed assets. Dividend tax was unexpected but in fairness is only applicable at higher income levels. With regard to insurance industry we will have to study the specifics, however there are some small though positive steps like reduction of service tax on single premium annuity policies, and increase in limit for employer’s contribution to superannuation funds.
Overall it is a positive budget with long-term objectives in mind. The industry will look forward to execution of the initiatives outlined.”
(G Murlidhar, Managing Director at Kotak Mahindra Old Mutual Life Insurance)
