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Union Budget: Reactions

Some found it balanced, some disappointing. Find out what the mutual fund industry has to say about the Union Budget 2015

Arvind Sethi, MD & CEO, TATA Asset Management
"Just as the RBI has been 'bullet proofing' the external balance sheet, we were hoping that the FM would take steps to do that for the governments balance sheet. In that context, the budget was disappointing because it assumes a questionable growth rate, relies too heavily on divestment to meet fiscal targets, does not address the revenue deficit issue head on and leaves the good things for the future. From the rate cut point of view the budget is a little disappointing because they have not dealt with some of the fundamental issues of revenue deficit and still relying too much on divestments as the means of meeting the fiscal deficit. Inflation may continue to come down, but RBI may continue to go slow on rate cuts. We continue to expect rate cut of further 50 bps in 2015."

Ritesh Jain, CIO, TATA Asset Management
"The government chose to spell out its thought process for the next four years through the Union Budget 2015-16, amply evident via measures on simplifying taxation structure (corporate and individual), while removing exemptions, its strong stand on the parallel economy plaguing the country, and its clarity on GAAR, to name a few. While there was some disappointment on the relaxation in immediate FY16 fiscal deficit target, it underlined the government's growth agenda, which is positive. Intent on curbing subsidies and leakages is the way forward. The bigger boost is accepting the Finance Commission recommendations, which enhances the states share, and gives decentralization a leg up, a key positive for state specific development for a large country like India. These are the key long term positives."

Ganti N Murthy, Head -- Fixed Income, IDBI Asset Management
"The expectations from the budget were sky high and the result was a mildly disappointing. After a pre-budget economic survey suggesting the need for big bang reforms for ensuring high growth , the budget did not contain any major reform measures. The main highlights given were

  1. No changes in personnel income tax exemptions limits
  2. Corporate tax rate to be reduced from 30% to 25% from next year with a consequent reduction in exemptions for corporate.
  3. Increase in exemption for NPS from 1 lac to 1.5 lacs
  4. Effort to reduce fiscal deficit to around 3% by FY 18.
  5. New law to be introduced to outlaw black money.

The budget is high on intent and hope of higher tax collections. The MF industry was expecting the notification of the retirement benefit funds under Section 80c, but that was not announced. Overall we can give the budget a rating of 6 out 10.

Amitabh Chaudhry, MD & CEO, HDFC Life
"While the broad macro-economic indicators in India have been improving, the investment cycle is yet to pick up and it was an imperative for the government to take steps to encourage investments. The budget for FY16 attempts to do precisely the same. The fiscal deficit target under FRBM has been delayed by one year and the additional revenues thus mobilized are being spent on infrastructure. Apart from this, there is a clear intention to bring in some innovative steps to improve the ease of doing business. The proposal to progressively reduce corporate tax to 25% in 4 years time is a move towards rationalizing the corporate tax regime. Other key positives in our view is the proposal for a new bankruptcy law, plans to monetize the gold holdings, clear focus on black money and penalties therein, deferment of GAAR and the reiteration of April 2016 deadline for GST. The overall budget numbers are also credible and are likely to be met. However, we believe more could have been done for encouraging domestic savings in financial assets especially longer term savings such as insurance. Overall we believe that the budget is positive for growth and is in sync with the current economic requirements of the country."

Shachindra Nath, Group CEO, Religare Enterprises
"Given the constraints of the fiscal space, it is a well balanced and well thought through budget that will unleash India's growth potential in the coming years and make it a preferred investment destination for global investors. Rationalization of corporate taxes, deferment of GAAR rules and ease of doing business will in general improve confidence. At the same time, the budget has introduced a comprehensive social security system for the country's poor that will provide them a much needed security net. As far as Religare and the overall financial services too is concerned, there are a number of positive takeaways from this budget including bringing NBFC operations under the ambit of SARFAESI Act that will make our NPA recovery more robust. Given our sizeable assets under AIF and bouquet of India focussed funds, the proposal to allow foreign investments in AIF will help us attract more funds. The budget has also taken the commendable step of significantly raising the limit for health insurance and that will encourage individuals to buy health insurance cover. The move to monetise gold will put this asset to more productive use."