In the Union Budget 2011-12, constraint is what was required on the expenditure side and by not having any major populist measures, the FM has managed to bring down the targeted Fiscal Deficit to 4.6%, which should be achievable provided fuel prices are hiked. Rightly focusing on pressing matters, measures to tackle high food inflation include viability gap funding will be provided for cold storage chains and increase in priority sector lending targets from Rs3.8 to 4.8lakh cr. Also, given the shortage of funds in the domestic banking sector, several measures are included to increase fund availability from other sources, pertinently FII investments in corporate bonds being increased to US$40bn, withholding tax reduced, Tax-free bond limits increased, etc.
Together with new bank licenses and increased foreign bank participation over the course of next year, the gap between savings and investments should get narrowed, keeping interest rates also in check - a positive for banks, infrastructure and the overall economy. On governance, there seems to be a firm commitment to plug leakages (direct transfer of cash subsidy), reduce black money, tackle corruption, monitor performance of ministries as well as continue fiscal consolidation. Without over-stretching itself, this Budget includes a decent set of measures without compromising on its fiscal deficit position and considering this, I would assign the Budget a rating of 7 out of 10.

The Finance Minister presented Union Budget today ie February 28, 2011 which intends to keep a balancing act of driving growth agenda and keeping fiscal deficit and inflation under control. His announcement of increase in basic exemption limit from Rs.1.6 lacs to Rs.1.8 lacs will be a welcome relief to "aam admi" providing tax savings of Rs.2000 per person. Also, reduction of sur-charge from 7.5% to 5.00% for companies is a step towards transitioning to new Direct Taxes Code effective April 1, 2012. Relief of withholding taxes on interest payments to 5% on Infrastructure Debt funds by foreign investors will facilitate funding in this important sector. Introduction of Minimum Alternate Tax at 18.50% on SEZ developers and units is a retro gate step and will have adverse impact on the same. Dividends received from foreign subsidiaries will be taxed at a reduced rate of 15% compared to a normal corporate tax rate. This one time relief will help Indian corporates to repatriate dividends from their overseas ventures into India. Similar provision was introduced by USA few years back as a one time relief and this should act as a welcome step. The FM also wants to introduce a constitutional amendment Bill for the introduction of Goods & Services Tax in this Budget session. The GST will also need buy-in from various states before it is implemented. The implementation of GST is expected to further rationalize prices for final consumers. In nutshell, this is a good balancing Budget and will add to growth in the economy.

It is heartening to note that government has recognized the need for overcoming shortcomings in distribution and marketing in agri sector and farmers to get remunerative prices with competitive prices for the consumer. Details to achieve this would have given a definite direction to the policy. The mentioning of review of the APMC Act, should spur some changes. I also welcome the announcement of direct transfer of cash for kerosene, diesel and fertilizers, as it would stop pilferage, ensure that benefits reach those it is intended for and also makes the subsidy bill worthwhile.

The Finance Minster has recognized that a major cause for food inflation has been due to supply side constraints, exacerbated by huge gaps in post harvest storage infrastructure for agricultural produce, especially for fruits and vegetables.
Responding to industry's fervent pleas all post harvest infrastructure, including cold storages have been granted "infrastructure status" by the Finance Minster. Hitherto, only port handling facilities of agri produce had been declared as "infrastructure".
There is an estimated 32 million shortage in storage capacity, and even conservative estimates put the immediate investment requirement at Rs. 10000 crore. The grant of infrastructure status to this sector will provide a major fillip for investment in this vital sector.
The Finance Minister's announcement that modern storage infrastructure, such as silos would be eligible for "viability gap" funding is also a good initiative to encourage modern storage practices, as currently post harvest losses are estimated at Rs. 50,000 crore due to poor storage practices. Along with this, the Finance Minister has also reduced customs duty to 2.5 % on the import of all cold storage equipment which is seen by the industry as a complete package of reliefs provided to this sector.
The announcement to pilot test cash transfers in place of grant of subsidies for kerosene and fertilizer is another excellent initiative but it would have been even better had this initiative been extended to food subsidies as well, which currently do not reach the intended beneficiaries.

The Finance Minister (FM) presented the Union Budget today amidst scepticism over the growth agenda of the Government. It is, therefore, indeed heartening to see the FM devote a good portion of his Budget speech to making a commitment to implementation of the pending reform initiatives.
The FM did well to commit that the Financial Sector reforms will be taken to their logical conclusion during this session of the Parliament. He assured the tabling of the provisions for the introduction of the Additional Banking Licences to Corporates during this Session. He has also assured the tabling of the long pending Companies Billing this session of the Parliament.
The proposal to permit FDI in Mutual Funds is a big ticket reform and can be the response to the decline in the growth of FDI in the recent past.
The proposals to simplify the refund of Service Tax is very welcome given that huge refunds have been stuck up in procedural delays. The reiteration of the Government to GST is also welcome. Of course, the tabling of Constitution Amendment Bill is just a step in this direction and buy-in of the states will be needed to implement this.
The imposition of MAT on SEZ developers and units is retrograde as it seeks to impose tax on income received from investments made with a commitment of tax exemption. This is advancing the negative impact of the Direct Taxes Code and should have been avoided.
The reduction of tax on foreign dividends received from subsidiaries of Indian Companies is welcome step facilitating eventual imposition of CFC regime. The marginal relief provided to individual tax payers is also welcome.
The proposal for Infrastructure Bonds of Rs 30,000 crs and the additional tax incentive to subscribers upto Rs 20,000 is a step in the right direction but a lot more needs to be done if this sector is to develop a thrust.

In spite of the tough macro environment and the political compulsions before important state elections, the Finance Minister has managed to announce a growth-oriented budget. Though there are no big bang reforms, but in his speech the Finance Minister has hinted at taking progressive policy actions in the key areas of delivery of subsidies, attracting foreign direct investment, boosting resources mobilization of infra development etc during the course of the year. Overall, it is a budget that has exceeded expectations that were rather low anyways.

It's easier for foreign institutions to invest into Indian financial markets than the Persons of Indian Origin or Non Resident Indians! The FM and RBI need to consider and overhaul these archaic processes controlling NRI investment which need to be closer to parity with Resident Indians. A review along these lines would go a long way in improving disclosures and practices."- Atul Gupta, MD, Orbis Financial Ltd.

Union Budget 2011-12 was a mildly populist one and largely attempted to tame inflation and rein in the fiscal deficit. The stock market reaction has been positive only because equities had factored in heavy pessimism like rise in excise duty, service tax rate and a bigger market borrowing figure. The key positives from the Budget, in our opinion, were maintaining excise duty rate, addressing agriculture sector, warehousing issues and attempt to resolve infrastructure financing issues. Big positive surprise was allowing foreign investors to invest in MF after meeting KYC requirements for equity schemes and no duty hike for tobacco. Major negatives include no FDI liberalisation in multi-brand retail as was widely anticipated and application of MAT for SEZs.
While revenue side budget estimates for 2011-12 seem to be in place, it appears that subsidies and expenditure side have been somewhat understated. It will be tough to achieve a 4.6% fiscal deficit figure unless non-tax revenues like disinvestment surpass budgeted figures and an amnesty scheme to bring black money back is introduced. A 4.9% fiscal deficit number looks more achievable. Overall a marginally positive budget, largely along expected lines", says Amar Ambani, Head of Research (India Private Clients) - IIFL.

'A skillfully balanced budget'
Hon'ble Finance Minister has struck a fine balance between growth and inflation and has also given a strong indication of continuing on the reform path.
FM has rightly resisted the temptation to increase the excise duty thereby giving out positive signals to the industry and to the India growth story. The re-assurance on the fiscal deficit trend as well as revenue deficit will go a long way in creating a positive frame of mind.
By allocating Rs.1,60,887 crore for the social sector the Finance Minister has taken due cognizance of the growth potential of the Indian rural market and its integration with the urban economy. The social sector will see a huge investment on heads like Education,Bharat Nirman, Food security Bill, etc.
The corpus of Rural Infrastructure Development Fund too has been raised substantially and sends out a strong signal for high growth in the coming years. Tax reforms are also being heralded and the DTC will be finalized in 2011-12. Significant progress has also been made on GST and I am hopeful of this getting through sooner than later.
The budget also gives a further boost for attracting FDI as well as allowing FI's to invest in MF schemes. The divestment in PSU's will continue and a target of Rs.40,000/- crores with 51% presence of the Government is a very positive signal.
The hike on export duty on iron ore fines and lumps to 20% advalorem is most welcome. I am sure that this will lead to greater value addition at home and encourage the domestic steel industry.
By forming a task force of Group of Ministers for addressing the issues of corruption, state funding of elections, transparency in public procurement and contracts the FM has shown the courage to tackle the root cause of the malaise of black money.
The general direction of the budget is good. The Government's move towards a direct transfer of cash subsidy to people living below the poverty line on Kerosene and Fertilizer will pave the way for a new era in governance.
The budget has the stamp of fiscal prudence written all over it and one can expect that it will tackle the problem of inflation while targeting growth and heralding reforms.