Budget 2013: Pragmatic, balanced; fair to tax super rich: Deepak Parekh

Deepak Parekh, chairman, HDFC, shared his view on the Budget.

Below is the edited transcript of his interview to CNBC-TV18. Q: How do you rate this Budget? The stock market has given practically no reaction? Do you see a dearth of big ideas in this Budget which can address some of these issues like growth and savings rate that our market has been grappling with?
A: It is a very realistic, balanced, and pragmatic Budget. Investment allowance of 15 percent on plant and machinery has been reintroduced.
If a house under Rs 25 lakh is purchased in next one year, then a person is eligible for a deduction of Rs 2.5 lakh, which was not the case before. The FM has extended the year of completion of power plants.  
Even the road sector which has been stalled from last six months, the FM has promised that 3,000 KMs of roads will be awarded in the next six months. So there is huge amount of incentives and growth factors which will kick start the economy, increase and improve the GDP growth rates for the year 2013-14. So, it is a very realistic Budget. Q: The two issues which may have made the market a bit unhappy, first is surcharge moving up from 5 percent to 10 percent and tax on the super rich. Are these irritants or just minor irritants which we don’t need to dwell on too much?
A: A peak rate of 30 percent with a 3 percent education cess, peak rate was a little below 31 percent and that has increased by 3 percent. I don’t think there are such low tax rates anywhere in the world.
If we include developed economies, the average rate is around 40 percent for people who earn significant sums of money. So it is an irritant but we should accept it and it is a very tiny dose of incremental taxes. The FM has been fair enough in not to bring estate duty which everyone expected which are regressive and he has taken an easier way out to marginally increase the tax on rich people. So I don’t think it is that negative.
He will not get significant sums of money but at least it is a token, a demonstration. It is a point made that we are taxing those who have a little more money.
People may not be that excited about big bang but if we look at the number of clarifications he has given, look at the amount of loopholes he has stopped. So far these loopholes and clarifications are concerned at least in one day by the FMs speech we have understood what the loopholes are and what has been stopped. So one needs to accept that we are not used to big bang Budgets. The FM presented the Budget under global depressed conditions. We have had one of the worst years in a decade and one cannot expect miracles from it.