Budget Reactions: Super-rich tax good move; laud FM's effort: Narayana Murthy

Finance Minister, P Chidambaram proposed to impose a 10 percent surcharge on people with income of more than Rs 1 crore in his Budget speech. Narayana Murthy, Chairman Emeritus of Infosys lauds the minister's effort in this direction stating that in a country where poverty is rampant, this kind of a tax will be peanuts for those who earn more.

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Moreover, Murthy feels Chidambaram has done a good job in containing the fiscal deficit at 5 percent and aiming for a target of 4.8 percent ahead. According to him, this is one of the most commendable aspects of the Budget.

Here is the edited transcript of the interview on CNBC-TV18.

Q: The finance minister invoking Azim Premji’s spirit said that those with incomes of over Rs 1 crore should help out the economy in times of distress and hence, imposed the tax or a surcharge of 10 percent on what is now being called the super rich tax. So, in that sense do you understand why he decided to do that and we believe that of the Rs 13,300 crore that he hopes to mop up from direct tax collections, the lion’s share is going to come in from that surcharge?

A: I am quite happy about this surcharge because at the end of the day, in a country like India where there is so much of poverty, people earning Rs 1 crore shouldn't crib about paying a 10 percent surcharge. Therefore, I welcome it. We should all pay reasonable taxes in this country. We don’t pay any tax on our dividends and long term capital gains tax is zero. So, if you consider all those things, this is peanuts.

Q: On the whole, how would you assess this Budget because the expectations were already very low, the hope was that he should go the populist way and they shouldn’t turn into an election Budget. Gratefully, it wasn’t one, but do you believe that in terms of pressing the right levers to jump start growth, to get the investment cycle kicking again, this Budget falls short of that?

A: The finance minister has done a good job of containing the fiscal deficit at 5.2 percent and his target of 4.8 percent is laudable. The fact that he has allocated increased funds to healthcare, education, food security, micro-finance, housing, all for the urban and rural poor and middle class is a good idea. There is no doubt about it.

However, on the side of enhancing the revenue on the issue of creating more and more jobs, I only wish he had taken a few steps. For example, the whole transfer pricing issue in IT industry is still pending, the issue of transferring people from Software Technology Parks (STPs) to Special Economic Zones (SEZ) has been pending for the least 3 or 4 years. There are several such issues which have been impeding out industry.

Therefore, I only wish we get a quick resolution of those issues so that growth can be accelerated and more revenues and more tax is paid and more jobs are created.

Q: What was the big highlight as far as this Budget was concerned? Of course, the all India Women’s Bank was clearly one, the first ever in the world, Naina Lal Kidwai, Chanda Kochhar are going to have competition as early as October, but besides that, to your mind what would be the big-ticket idea that you would take away from Budget 2013-14?

A: I think the fact that the finance minister has stood on the house of the parliament and said that he is going to contain the fiscal deficit at 4.8 percent next year is the big-ticket idea. I think that is truly extraordinary, truly commendable.

Second, I think while containing the fiscal deficit, he has also enhanced allocation to areas that matter to the poor and the middle class. He has stressed on areas like education, scholarships, schedule tribes, food security, urban housing – all these are I think things that we have to stand up and salute and appreciate.

There will be issues, there will be problems. But, somebody who said that look I will contain the fiscal deficit while I make sure that life is better for the common man, I think he is truly an extraordinary person. Therefore, my salute goes to Mr. Chidambaram.