Arth Yantra's Chief, while reacting on the personal finance aspects of the budget, said that there would be minimal impact. He said that the finance minister had not taken any major reform initiatives. There is no major push to increase the savings rate among the tax-paying professionals. So we do not see consumers moving from their most preferred investment avenues i.e. gold and real estate. They will continue favoring these asset classes and no major change in domestic participation in capital markets can be observed.
However, the first time home buyers get a significant 1 lakh additional deduction on the interest being paid towards home loan. This could result in significant amount of savings for the middle income population. This also puts forward the fact that we are in a high rate regime. The individuals earning between 2 – 5 lakhs per annum get an additional tax credit of INR 2000. Realizing the importance of domestic investor’s participation in capital markets, RGESS is now extended to MF’s and some listed companies.
Babu Rao, President, Association of Indian Forging Industry (AIFI):
The budget proposals of the Finance Minister for 2013-14 do not seem to address the slow-down in the manufacturing industry more specifically the auto-sector on which the forging industry depends to a large extent. The investment allowance of 15% announced by the Finance Minister will help only the larger industries with outlays of over Rs. 100 Crores. The majority of the members of the AIFI who are SMEs will not be able to avail of this. The Finance Minister should reconsider and extend it to the entire industry to give the much needed stimulus to manufacturing.
Rao said that the welcome measures for the SME Sector are the increase in SIDBI Fund from Rs. 5,000 crore to Rs. 10,000 crore and the Rs. 500 crores credit guarantee scheme besides sops for loans up to Rs. 25 lakhs.
He has also set apart Rs. 1000 crores for rewarding candidates who get skilled and duly certified. Another positive move was the proposal to shift oil exploration projects to revenue-sharing from the existing profit-sharing scheme - a welcome measure to control gas and oil prices. This should be extended to mining of all minerals and ores also.
Antony Jacob, Chief Executive Officer, Apollo Munich Health Insurance:
We are pleased to see that the insurance sector has been accorded importance in this Budget, through the Finance Minister’s mention of the Insurance Amendment Bill and the PFRDA bills. Including banks to distribute insurance would ensure greater penetration of insurance in areas where people require this essential financial product, but have had no means of obtaining it so far.
Jacob appreciated the extension of Rashtriya Swasthya Bima Yojana (RSBY) to other categories of families such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers. This should go a long way in ensuring insurance coverage for those who need it, but cannot afford large healthcare expenses.
Miranjit Mukherjee, CFO & Senior Vice President-Finance, Tata AIG General Insurance Co. Ltd.:
Overall the Union Budget has assisted the insurance industry to widen its reach and distribution network. Though the industry had hoped for tax exemptions in health and other segments, the end-customer will gain through the wider reach of insurance in smaller towns and through the bank’s distribution network. By and large the Fiscal Deficit / CAD remains a concern and we will be eager to see how this Union Budget affects the same in the coming fiscal year.
Dr. P. Nandagopal, MD & CEO, IndiaFirst Life Insurance:
It is a positive budget from the insurance and BFSI perspective. On the big picture, the investments in education, skill development, infrastructure and rural development will have positive impact on the life insurance demand. On the specifics, while there're no additional tax concessions as expected, the big announcement is the proposed open architecture for bancassurance through the broking route. In the long term, this would deepen the distribution reach of the banks in offering a wide range of insurance products. We need to check the details and also take steps to see the broking model does not result in excess distribution costs for the insurance companies which are already reeling under the pressure of thinning margins.
Dr. Mahesh Y Reddy, Director General, ILFI:
Welcoming the General Budget 2013-14, Dr. Mahesh Y Reddy, Director General, Infrastructure and Logistics Federation of India (ILFI) said that the Budget contains many redeeming features that can induct much needed buoyancy in the economy in general and infrastructure in particular.
Corporates have attached a lot of importance to the Budget, primarily to consolidate the slow recovery that is taking place. Some of these measures will help revive the economy. At the same time, increase in the surcharge on corporates and high networth individuals should have been avoided since such measures will have bearing on the savings rate, which is dithering of late. He hoped that surcharge will be rolled back at the earliest.
Sanjay Sanghvi, Partner, Khaitan & Co.:
Overall, the theme of the budget is directed towards growth momentum of the Indian economy as a long term measure and also providing stability and certainty of tax laws to boost investors confidence in India as investment destination. Tax on super-rich was perhaps the compulsion on the part of the Finance Minister to raise additional revenue for the Government to address fiscal deficit problems. However, the increase of surcharge by almost 100% on Indian corporates as well as foreign companies is something which may not go well with corporate sector.
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