Performance Projections

Malvinder Singh
CEO038; MD Ranbaxy Laboratories

There is a greater focus on health in this Budget. There has been a focus on HIV, with an allocation of Rs 1,000 crore. We welcome that, since it is important to be healthy as a nation. A five-year extension on weighted reduction on research and development is also a welcome step. Overall, I8217;d say it is a well-balanced budget. I am, however, not pleased with the hike in the dividend distribution tax.

Habil Khorakiwala
Chairman, Wockhardt

Steps in social sector and special focus on agriculture are welcome, but the FM has missed an opportunity of reaching a two-digit growth trajectory in view of the tax proposals. The corporate sector had expected a lowering of the tax rates in view of the buoyancy in revenue collections. On the contrary effective tax incidence would be going up by more than 1 per cent as a result of the new tax proposals.

Venugopal N Dhoot
Director Essar Group

The budget clearly spells its aim to generate development from the bottom by strengthening agriculture and SSI Sector with a new breed of entrepreneurs. However, the impact of increase in the dividend distribution tax on corporates to 15 per cent will be negative on growth, investor sentiment and capital markets.

S K Roongta
Chairman, SAIL

This is a welcome and positive budget for the steel industry. Govt. has rightly recognised the need to conserve mineral wealth, especially iron ore, for value addition within the country. Levy of export duty on iron ore and concentrates is timely. It will be appropriate if revenue so generated is utilised for developing infrastructure in and around mineral bearing areas. Also heartening is the fact that the much awaited phasing out of CST is finally going to begin in 2007-08

Bert Paterson
Aviva Life Insurance

There could have been more for the insurance sector. We are disappointed that the government has not taken the opportunity to announce much needed reforms required for the growth and development of the insurance sector. This budget represents a missed opportunity to stimulate further growth. However, we can look forward to a comprehensive Bill to amend insurance laws to be introduced later.

Ashu Suyash
MD 038; Country Head Fidelity Fund Management

The announcement relating to individuals being permitted to invest overseas through mutual funds is welcome. Although, the 50,000 limit for individuals existed, there hadn8217;t been too many takers given the complexity of investing overseas. We believe that this clarification will give investors a convenient and tested route to geographically diversifying their portfolios.

Ranjeet S Mudholkar
CEO, FPSB India

It was expected that the overall income tax exemption limit will be raised by around Rs 30,000-50,000, but the increase is Rs 10,000 only. That means a relief of around Rs 1,000 to Rs ,2000 on tax liability, which is marginal. The raising of DDT from 12.5 to 15 means lesser yields on investments for investors. Introduction of the 8216;Reverse Mortgage8217; products for Senior citizens is important.

M Ramadoss
Chairman 038; MD, Oriental Insurance

The increase of Rs 5,000 is marginal. Given rising medical expenditures, an exemption of Rs 25,000 was called for. Moreover we had also asked for a premium tax of a standard 10 per cent in lieu of service tax, which again, didn8217;t come through. Service tax is subject to change, whereas we deliver services only when the claim is raised which is why we had asked for a premium tax which was stable.

Trevor Bull
MD, Tata AIG Life Insurance

It is a missed opportunity. The budget largely focused on infrastructure, health and agriculture which are important for a nation8217;s economy, but missed out insurance, which funds these long-term activities. While higher deductions on health insurance are welcome, it is disappointing that no attention was paid to pensions.

Pankaj Razdan
MD, Prudential ICICI Mutual Fund

A growth oriented budget that attempts to ensure inclusive growth. The Finance Ministry has handled the threat of inflation by introducing measures to control cost. The fiscal discipline which is maintained as per FRBM target is a long-term positive for improving the creditworthiness of the country. Apart from that attempts to control inflation by focusing on both demand and supply side is another positive stance.

R Venkataraman
Copromotor, India Infoline

It is very neutral budget with nothing dramatic. The market expected some reduction on tax front but that did not happen. The budget simply focuses on social justice, equity and inclusion and has allocated money to various social needs but the real concern is will it reach the real beneficiaries. Had the FM been clear on the policies as to how it will get routed to the real beneficiaries, it would have been more effective.

S. Naganath
President, DSP Merrill Lynch Mutual Fund

The budget looks okay on the macro front. The deficits are down and inflations also expected to come down in a month. The dividend distribution tax would not have significant impact, but Cement and IT will impact the sectors a bit. The good moves on the Agriculture and social fronts that will boost growth in the rural areas. Once the growth rate picks up it will boost the agriculture oriented sectors and the consumption will also increase.

Amit Rathi
MD, Anand Rathi

The budget is into the election mode. There are no positive surprises and even on the agricultural side there is no real initiative which can be termed significant. The budget is just a build up on previous policies. The increase in cess by one percentage point will have an impact across the board. Other negative signals come from the increase of dividend distribution tax and MAT implementation on IT companies.

C. Parthasarathy
Chairman, Karvy Group

The budget aims at controlling the inflation, align the growth of different economic segments and ensure high growth sectors subsidize critical sectors, lagging in growth path. Higher allocations for rural infrastructure, health and education will be positive for companies. The decision to permit MFs to launch dedicated infrastructure funds will be instrumental in channelising retail money.

Dr Rajiv Kumar
Director 038; CEO ICRIER

The budget has a several proposals for the poor, senior citizens, handicapped and rural folk, but how effective it will be is remains to be seen. It would have been better to focus on a few large issues and get them implemented. The budget has been more of a financial and accounting exercise, bereft of vision, so it misses out on opportunities and compromises future growth.

Suman K Bery
Director General NCAER

In terms of integrating India with the global economy, this budget is fine. It is now open to using forex reserves for infrastructure needs, which is good.This is a responsible Budget but it could have been more aggressive.

On cement pricing, I feel the government should abstain from telling manufacturers to how much to charge for the products. This is in line with last year8217;s differentiating policy for small and other sized cars. The government should not come with such industrial policies. The significant increase in interest cost is worrying as it could undermine government finances.

Subir Gokarn
Chief Economist CRISIL

The budget seems to have no negative or positive impact in the mid term and there may not be any differentiation on the growth rate. But it is important to look into the delivery mechanism, and not just fund allocation. The public delivery system has failed. There has to be some follow up from the ministries concerned and the benefits will only be felt if it is implemented properly. The differential excise duty structure in the cement industry is detrimental and goes against the principal of equal treatment.The same sort of differentiation is has been brought in information technology, with the applicability of MAT to the sector. IT companies located in special economic zones will be able to save on tax, but others won8217;t.

Abheek BaruaChief Economist, ABN Amro Bank

It is positive for the long term though the short term remains uncertain. Institutional innovation needs clarity, but the steps are in the right direction. Tax collection targets should be achieved. The Government has focussed on agriculture, education, health and other social issues but the implementation seems to be a concern. Because of the dividend distribution tax hike to 25 per cent liquid funds might lose some money to bank deposits.