The finance minister today presented the budget amidst high expectations. 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 increase public spending to kick start the same.
The minister has very diligently focused on numerous initiatives which will collectively have a long term impact. Reading the fine print of the budget reiterates my belief that the Government is moving in the right direction to tackle key issues being faced by the country such as infrastructure development, financial inclusion, clarity on tax regime and simplifying the regulatory paradox for operating in India.
While certain measures would increase the expenditure in short term, for e.g. increase in Excise Duty, Service Tax and higher cess etc, plan to reduce the corporate tax rate over next four years, along with streamlining of available exemptions is a very positive move in bringing India at par with other emerging economies.
Achieving the fiscal deficit target of 3% has been delayed by one year and the additional revenues thus mobilized are being spent on infrastructure. The outlay on capital expenditure has been raised significantly which is a move in the right direction.
Increase in the tax exemption limit for health insurance is a very important step towards increasing health insurance penetration in India.
Increase in the eligible deduction on account of contribution to a pension fund or NPS and introduction of additional limit of Rs.50,000 for NPS are very positive steps to enable retirement savings. As the Finance Minister rightly acknowledged, pension currently has a very poor reach and I am sure that the Budget will help build a self sustainable social security system for all Indians.
Overall the Budget laid out sufficient reforms for the insurance sector including life, health, accident benefits and pensions through such initiatives as Jan Suraksha, Atal Pension, Jeevan Jyoti Yojana after the great success witnessed by the Pradhanmantri Jan Dhan Yojna.
Individuals can now through appropriate savings tools, save taxes in India upto Rs. 4,44,200 a year, which the finance minister indicated has potential to increase further in next few years.
Setting up of a sector neutral task force for financial service grievance management is also a positive along with proposal for monetization of gold, which will help shift savings towards financial assets.
Various other initiatives also introduced in the Budget also provide the long term impetus to the economy to get back on growth track with GDP growth rate expected to be between 8-8.5% in FY 15. And merging the FDI, FII and FPI bucket is another move in right direction to make India attractive investment destination. Moreover, Unchanged GST deadline of 1st April 2016 lays out hope of further reforms in near term. Overall we believe that the budget is positive for growth and is in sync with the current economic requirements of the country.
Mr Amitabh Chaudhry has been with HDFC Life since January 2010. HDFC Standard Life is today recognized as the premium brand in the insurance space and is one of the India’s largest private insurers. Before joining HDFC Standard Life, he was the MD and CEO of Infosys BPO Ltd and was also heading the Testing unit of Infosys Technologies Ltd.View Complete Profile
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