(MENAFN - Khaleej Times) The Indian budget for 2013-14 was presented by Minister of Finance P. Chidambaram on Thursday.
As always, the NRI community, while applauding the proposals, also is critical to some extent on the shortfalls and omissions.
Given below are excerpts from the comments Khaleej Times received from a cross-section of NRIs.
Y. Sudhir Kumar Shetty, COO, Global Operations, UAE Exchange:
While the spirit of the budget to restart the engine of growth of the Indian economy is commendable, from the point of view of NRIs, there is hardly anything to cheer about. NRIs are mostly a missing community in any budget and even if their needs are represented, they are marginal as in the case of this year's budget too. For instance, the relief that Mr. Chidambaram has announced, in the case of gold imports, changes the regime just marginally and is way below the expectations of NRIs, particularly when viewed in the context of the current gold prices.
The current restrictive regime for gold imports will only revive alternate illegal channels to flourish, the same routes which had shut down when gold imports were liberalised earlier.
Since reining in confidence on Indian economy is an imperative, the finance minister has talked of attracting FDI to boost infrastructure. Perhaps, he could have also leveraged the potential of NRIs by creating special investment vehicles, which could attract funds from the Diaspora that could be used for nation building."
Shamlal Ahmad M.P., Managing Director, International Operations, Malabar Gold:
In my opinion the Indian budget for the year 2013 was not so favorable for industries. Being an important contributor to the GDP, the industries should have been given more backing in the budget thereby being able to contribute better to sustain the growth of the country during these crucial periods.
For expatriates, there are minor reasons to cherish as the government has addressed one of the concerns raised by NRI's related to free carriage of gold jewellery into India. The government has revised the law dating back to 1967 by increasing the allowance for NRI female travelers from Rs20,000 to Rs100,000. Considering the increasing gold prices over the years, if feel that it should have been at least Rs200,000.
Overall my opinion is that the government should have focused more on promoting industries and exports to reach and sustain eight per cent growth potential of the economy.
Sudesh Aggarwal,Chairman, IBPC-Sharjah and India Trade Centre:
Looking at the review of the performance of 2012-13, the government has failed to contain the fiscal deficit, unemployment and inflation, the tall promises they made in the last budget. The growth momentum has not been kept. However, the vision statement and direction taken in the 2013-14 budget is correct but time will only tell whether the government is in a position to implement what they have planned. The policies and plans announced for the marginalised people are appreciable. Nothing on the DTC or NRIs that is worth mentioning.
Dr M.I. Sahadulla,Chairman and Managing Director, KIMS Healthcare Group:
It was a very welcoming move from the Chidambaram to announce Rs370 billion towards health and family welfare in the new budget. I feel that considering the current economic growth rate of five per cent, it is a very well balanced and prudent budget. I am sure India will experience exceptional growth in the healthcare area and the health insurance sector also will be growing at a faster rate than before. I expect more FDI in healthcare and pharma areas. In a pre-election year I feel that overall it is one of the best budgets especially giving importance to infrastructure and rural development.
Raju Menon,Chairman and Managing Partner, Morison Menon:
The budget appears to me as a responsible and multi tasking one. Even though it was widely expected as an election oriented one, when it was presented it had an overall image of a balanced budget more appropriately an austerity budget. The intent of the government, especially finance minister, to overcome the current difficulty was evident from the budget.
There was no major announcement on how to cover the fiscal deficit in the budget other than a note on more FII and FDI required. However, more clarity with respect to policy matter for attracting FII and FDI is yet to be announced.
The finance minister has taken an overall macro level approach for increasing revenue without disturbing direct taxes or indirect taxes considerably in order to maintain purchasing power with people and at the same time increased tax revenue initiated from the super rich class by way of surcharge which is only for the year 2013-14. Most of the luxury items are heavily taxed.
When we look at overall expenditure announcement there is intent to have many direct and indirect employment generation. Announcement of several industrial corridors is another example to push sustainable growth. SMEs being the growth engines have been supported with easy methods to generate capital through SME exchange.
As per the FEMA rule no corporate, partnership or proprietary ship to accept deposits from NRIs. Relaxation in the above rule was expected to support businesses Similarly, NRI bonds was also expected in the budget announcement. Both were not included however, there was a mention on infrastructure bonds which will provide an investment avenue for NRIs also.
Abbas Ali Mirza,Former president of IBPC, Dubai:
Kudos to the finance minister, who, walking a tight rope, has been able to present a prudent budget with several forward-looking proposals against the back drop of elections next year.
The finance minister had several difficult objectives to accomplish including achieving a targeted GDP growth of 7.6 per cent, battling against inflation on all parts and tackling a huge current account deficit (CAD).
Furthermore, he categorically stated in his budget speech that he had an "overarching goal" of creating opportunities for youth, which is clearly evidenced by an allocation of Rs255.55 billion towards Right to Education in FY 2013 and other measures. Yet another noteworthy budget allocation was an allocation under the National Health Mission of Rs208.22 billion.
The emphasis towards easing "doing business in India" was a welcome announcement. The other significant highlight would also be the allocation of resources to youth, women and the poor. The idea of setting up the first "public sector" bank for women is indeed a novel idea and a step in this direction.
On the taxation front, deferring the implementation of the Direct Tax Code was a welcome move. The marginal increase of baggage allowance, although a step in the right direction, may not be considered adequate in terms of the amount of the allowance being proposed. Overall, a refreshing and forward-looking budget.
Adeeb Ahamed,CEO, LuLu International Exchange:
This year's Union budget has a pro-development undertone in it and is certainly likable. The budget has definitely brought cheers among the NRI community and has got something for everyone.
The decision of the finance minister of not further increasing the tax on gold will definitely prevent illegal import of the precious metal to the country and curb money-laundering activities. Reduction in the interest rate on housing loan is a boon for NRI investments in Indian real estate.
A 10 per cent surcharge on the income of wealthy individuals ought to keep the leftists elated. Simplified norms of foreign portfolio investment will categorically help the NRIs to invest more in India, while insuring the inflation index bond is an obvious welcome move. Students will greatly be benefitted with the new Credit guarantee funds.
T.N. Manoharan, Chairman-MCA, past president ICAI and Director of Mahindra Satyam:
Chidambaram has done a balancing act between prudence and populism in framing his proposals.
The mission to propel the economy towards 8 per cent growth has been rightly identified as a challenge and many of the proposals announced seemed to be aiming stimulate growth on the industrial front. Establishing two industrial corridors and two new ports would do a lot good for gaining momentum in this direction. It is heartening to note the importance given to Health, Education and Infrastructure.
Non-residents investing in long-term infrastructure bonds would be liable for tax only at 5 per cent rate and this concession is now extended even to investments made through designated rupee accounts. Establishing first exclusive public sector bank for women; promises for empowering and securing dignity and safety for women; providing skill development for youth to improve their employability and relief measures for the poor are all are appearing to be populist announcements.
If these are seriously and expeditiously implemented then they could bring about the much-required social justice. While the FM seems to be confident of containing the fiscal deficit at 5.2 per cent, he has promised to keep the revenue deficit at 3.3 per cent, which appears to be a tall order to achieve the track record in the past.
S. Venkatesh,Managing Partner, MCA Auditing:
It is growth oriented and balanced given the political and other compulsions.
Due to election in the ensuring year, finance minister has attempted to do the balancing act. He tried to rejuvenate the growth to reach the 8 per cent level.
Tax administration reform is a welcome move and it will improve tax perception of India. GST implementation will lead to higher growth.
Allocation of additional funds for Banks capital is a good move. Gold limit increase to Rs50,000 for men and Rs100,000 for women passengers is still not enough to cover the value what people wear and travel.
Jitendra Gianchandani,Chairman, Jitendra Consulting Group:
There was no pinwheel in the budget for NRIs and foreign investors. However to simplify KYC norms governing foreign investors and to simplify procedures for entry of foreign portfolio investors to invest in India is good news.
And doing business in India will be easy, friendly and helpful, hope it will improve India's present rank of 132 among 183 countries.
Investor with stake of 10 per cent or less will be treated as FII as against 24 per cent; any stake more than 10 per cent will be treated as FDI and FIIs will also be allowed to participate in the currency derivatives segment of the stock exchanges. This will attract more foreign capital in India.
Being election year, foreign investors were not excited either, though India needs foreign capital but they have to wait and watch.
The super rich have been surcharged only for one year is a smart idea. It is highly ambitious to keep fiscal deficit for current fiscal estimated at 4.8 per cent. Women, youth and the poor were the commendable targets for budget initiatives. The finance minister has stunned everybody, he is great number cruncher
Kiran Sangani, Managing Partner, Sangani and Company:
This is specially election oriented budget.
Being last budget before election, the FM has tried to please everybody, mainly middle-class people, by providing huge fund for schedule class/tribe, health, education, skilled development for youth etc.
Steps towards strengthening capital market and increase in allowance for jewellery for the passengers coming from outside country is welcome.
Increase in tax on royalty may affect transfer of technology and discourage foreign investment. Establishment of bank especially for woman is a good idea.
Navin Kapoor, Managing Director, Xpertize United:
The finance minister has done fine balancing act between populist measures and reform agenda in the election year budget.
Current account deficit is a cause of concern and can be reduced only with higher growth and additional sources of revenue.
The FM is creating a roadmap for higher FDI and additional surcharges on rich individuals and companies are welcome.
There is lot of sops for backward class and minorities.
I am sure this will take us towards 8% growth in the next two to three years.
Sajith Kumar P.K., Director and CEO, JRG International:
The budget focused more on India's growth and friendly for both domestic and international investors.
The decision to adopt international practices and the segregation of FII and FDI given more clarity to the market players.
A 10 per cent stake in particular stock will be considered as FII and more than 10 per cent stake as FDI.
Opening up the currency derivative market to FIIs will boost Indian currency market. Government projects and plans to boost food, agriculture, rural development, infrastructure and education sectors will support to bring Indian GDP into higher levels.
The reduction in STT, enhancement of Rajiv Gandhi Equity Savings Scheme to mutual funds, more focus to debt market will attract more retail investors into Indian stock market investments.
Carrying gold to India by the international passengers increased to the value of Rs100,000 for female passengers and Rs50,000 for male passengers will also arrest the issues facing by NRI at Indian airports.
Rana Kapoor,Founder and CEO, Yes Bank, and President (elect), ASSOCHAM:
The finance minister has delivered a balanced budget, refraining from any big bang announcements and instead opting for multiple pragmatic initiatives with a focus on socio-economic development and resuscitating growth thereby ensuring fiscal prudence atop economic priority.
The expected fiscal consolidation in 2013-14 has been laid out by a combination of expenditure switching investment driven measures.
On the revenue side, while the budget refrained from any major change in tax rates, the government expects to improve the tax-to-GDP ratio by 50 bps to 10.9 per cent in FY14, predicated on a revival in economic growth and widening of tax net.
In addition, the government aims to garner greater revenues from disinvestment proceeds. As such, it is critical that the government strives to pace its disinvestment program evenly during the course of the year.
Mahmood Bangara,Chairman, AMT Group, Dubai:
The Union budget didn't impose too much of burdens, nor offered any significant relief, but on the bottom line, the stock market sentiments slightly swung to the negative side due to the impact of new and increased taxes.
Priority segments like education, infrastructure etc continue to get deserving allocation, but a fair distribution between regions must also be seen. Direct tax-GDP ratio is only 5.5 per cent, which shows the magnitude of evasion, and 4.6 per cent for indirect taxes.
So the strategy must be to make evaders to pay and not to impose more on genuine taxpayers. Incentivise production to enhance the base value for collecting more excise duty, rather than increasing the current rates.
At least to offset inflation, the direct tax rates should have been brought down for low-income groups. Increase in gold import allowance for NRIs is a welcome move, which will avoid hardship of NRIs.
- See more at: http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/internationbusiness/2013/March/internationbusiness_March9.xmlion=internationbusiness#sthash.nTImume5.dpuf