While presenting the tax proposals in the Budget 2013-14, the Finance Minister set the context by stating that the underlying theme of his proposals is to bring clarity in tax laws, stability in tax regime, provide a non-adversarial tax administration and a fair dispute resolution mechanism.
It is not a flamboyant or even a populist Budget, as many would have expected, for the simple reason that early next year the country goes for the General Elections and Finance Minister P. Chidambarams chief concern seemed to be reducing fiscal deficit than curbing inflation.
Measures for further expanding and deepening financial markets and facilitating foreign participation have also been announced. The budget is one part of overall economic policymaking and the budget presented today is a certainly a step forward in the series of initiatives announced by the government in recent months.
This years budget is a workman-like balancing act and the government has done a decent job given the challenges in the economy. On the positive side we are happy to see the delivery on the fiscal promise-estimate at 5.2% FY13 & 4.8% FY14 but lack of further visibility on policy initiatives for the coming months is a disappointment.
Given the fact that elections are just round the corner and the grim macro-economic scenario, the Finance Minister has done a fairly commendable job. He has resisted the temptation to announce a populist budget.
Insurance companies are now empowered to open branches in tier II cities without prior IRDA approval which is a good move and would facilitate penetration without much lag, except that there needs to be more clarity on the definition of Tier II markets.
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.
The proposal to increase income limit, avenues and time frame for retail investors under the RGESS is expected to invite a higher degree of retail participation in the Indian capital markets over the medium term.
Union Budget 2013-14 did not have much focus on the Telecom sector in particular but the overall budget will be good for investments. There has been a meaningful increase in planned expenditure to the tune of 30%.
The expectation that the Finance Minister would give the right signals to investors in the agriculture, warehousing and cold chain infrastructure space through an integrated package of measures to be announced in the Budget has been largely belied.
the Finance Minister has confined the fiscal deficit to 5.2 per cent in FY13 and as expected, this arithmetic achievement is in line with his topmost agenda of averting a country rating downgrade: IIFL