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| February 28, 2001 | Feedback | |
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 'Budget leaves one with a good feeling'Terming it as an excellent Budget, Shailendra Bhandari, Managing Director, Prudential ICICI Mutual Fund said that this time the FM, instead of trying to simply plug the gaps by squeezing more taxes from already stretched taxpayers, he has actually tried to tackle the issue of expenditure. Bhandari said that the lowering of administered interest rates by 1 to 1.5 per cent will serve the double purpose of boosting the economy while reducing government borrowing costs. Similarly, the attempt to control government spending sends a very welcome signal to the markets, he added. If all goes well this should see the fiscal deficit being restrained at 4.7 per cent of GDP, and net market borrowings for next year actually slightly lower at Rs.773.53 billion, he said. While the series of measures announced for the capital market will prove positive across the board, the long-pending removal of most of a series of income tax surcharges will boost bottom-lines, he pointed out. This will go well with the reduction in dividend tax and the increase in the FII investment limit to 49 per cent. Bhandari feels that mutual funds should be clear winners from this Budget, with debt funds in particular benefiting from the reduction in dividend tax to 10.2 per cent from the earlier 22.4 per cent. "To the extent that the equity markets prosper, we should see fresh flows into equity funds as well. A minor drawback is that despite high expectations, nothing seems to have been done for pension fund reforms." Bhandari sums up by saying, "this Budget leaves one with a good feeling. We can quibble about whether the fiscal targets are realistic, or whether the brave moves on labour reform and privatisation will actually happen. Instead should actually applaud the move to simplify the structures of direct and indirect taxes, and to rein in the tendency for non-plan expenditure to balloon."
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