A. Balasubramanian, CEO, Birla SunLife AMC on Union Budget 2013 announcements:
Q. What is the big takeaway for you from the Budget?
A. From the mutual fund perspective, there is a clear focus on creating an enabling environment for the expansion of the industry. First and foremost, there is the extension of the Rajiv Gandhi Equity Savings Scheme for three years. Second, there is a clear mention about mutual fund distributors being made members of stock exchange to facilitate subscriptions and redemptions through the stock exchange platform as well seamlessly across the country. With the removal the anomaly that existed earlier of investing 'Pass Through Certificates' through the SPV (special purpose vehicle) has been addressed in this Budget. This will give a new lease of life to the securitization market and might help in building a vibrant capital market.
Q. What do you think is the outlook for the economy?
A. Huge expectations were being built on the Budget, which was expected to give a direction for economic revival. Finally, the roadmap is in place. It is a well balanced Budget providing a more realistic estimate of both the revenue and the expenditure parts of the economy. Given the current challenges in reviving economic activity and increasing revenue, we believe the Budget has delivered the best it can. Overall expenditure management continues to be the key driver for managing finances, supported by asset sales through stake sale in public sector units as well as spectrum auctions. One may argue about the actual figure that will be achieved. There could be some scope for spending less which might lead to managing the fiscal balance better. Though there has been a mention, the Budget has not clearly articulated how it will tackle the Current Account Deficit concern.
Q. What is the outlook for your sector in particular?
A. The good part of the Budget is that it has not increased the tax burden for a large pool of middle class taxpayers. Budgetary provisions such as (a) increasing the base limit up to Rs.5 lakh (b) extending the Rajiv Gandhi Equity Savings Scheme and (c) increasing the limit of deduction availability to Rs 2.50 lakh for home loan borrowers are intended towards putting a little more money in the hands of taxpayers. The budget also has laid out a clear roadmap on channelizing public savings into the capital market through introduction of inflation adjusted bonds.
On the taxation front, though no major changes have been proposed, a few sectors such as tobacco and automobiles in the SUV segment are being taxed more than before through increase in excise duty. Moderation of the securities transaction tax should ideally increase the participation of traders in the equity market. This might provide more debt. Reduction of withholding tax for overseas investors in corporate bonds is a welcome move to attract a larger pool of overseas investors to our bond market.
Q. What is the one thing that stood out for you from the Budget?
A. I would call it a responsible budget with the right balance between growth and expenditure management. And at the same time, it has addressed a majority of the micro issues such as KYC compliance etc in a detailed manner to remove any potential hurdles to growth. Lastly, the budget has found a fine balance between keeping the momentum on the consumption front and at the same time turning the focus on private sector investments through revival of the investment allowance for small to medium-btdsized projects.