Abhishek Goenka, founder and CEO, India Forex Advisors, says,“The much awaited annual budget did not prove to be a great surprise, for which the markets were eagerly waiting, especially before the general elections. The budget was very conservative, with limited modifications in spending, income tax and investment reforms. Concerns were expressed about a high current account deficit, inflation and slowing growth, but no clear roadmap was provided by the Finance Minister. This was taken quite negatively by the local market, which slipped by almost 200 points.”
After the budget announcement, the rupee also depreciated majorly from 53.65 levels to 54.40 levels.
There was also an overall acceptance of the fact that inflows are crucial, and the country needs more than USD75 billion this year and the next year to manage its CAD.
Goenka also says, “We have also not seen any substantial improvement in the overall roadmap, which should make rating agencies revise their outlook on Indian finances immediately. It was a more of a 'buy the rumour, sell the news' event, which ultimately directed the markets and the rupee to its real fundamentals. Overall, India forex still maintains its weaker outlook on rupee for the days to come, with the rupee expected to reach 55 levels soon."
Putting across the insurance industry’s perspective on the budget, Nilesh Sathe, Director and CEO, LIC Nomura Mutual Fund, says, “As against the market expectations of a populist budget with the backdrop of the general election next year, the Finance Minister has announced a realistic, balanced and pragmatic budget. The fiscal deficit target of 4.8% is possible in view of the enhancement of the disinvestment target from Rs. 30,000 crore in the current fiscal to Rs. 40,000 crore and reduction in subsidies. The emphasis on infrastructure funding is also laudable.”
He also adds, “The surcharge of 10% on the super-rich is not going to affect large numbers, but will add a substantial amount to the exchequer. First-time investors in RGESS will have tax relief for their investments for three years. It will certainly attract more investors in equity market/mutual funds. The introduction of Inflation Index Bonds and additional relief on housing loans will attract small tax payers. DTC not coming very soon is also a welcome sign.”
Dr. P Nandagopal, MD and CEO, IndiaFirst Life Insurance, says that it is a positive budget for the insurance and BFSI segments. He says, “ Considering the big picture, the investments in education, skill development, infrastructure and rural development will have a positive impact on life insurance demand. On the specifics, while there are no additional tax concessions, , a big announcement has been made - the proposed open architecture for bank assurance through the broking route. In the long term, this would deepen the distribution reach of banks in offering a wide range of insurance products. We need to check the details and also take steps to see the broking model results in excess distribution costs for insurance companies which are already reeling under the pressure of thinning margins.”