The Union Budget has sought for balanced growth with a special focus on developing rural economy as well as placing significant importance on infrastructure. Given the challenges on inflation, the Budget has announced a slew of measures which would contain food inflation. Moreover, a tight fiscal consolidation path has been charted out. For the banking sector, the Budget addressed the issue of NPA management by promoting additional debt tribunals. The Budget has encouraged banks to extend long-term loans to infrastructure. Further, the financial inclusion has been boosted by proposing to open two bank accounts in each household. For the purpose of recapitalisation of banks, the Budget has sought direct retail holding in bank shares.

Also, the decision to increase interest subsidy for agriculture loans, increase in interest exemption on housing loans and other measures for housing are positive steps. Further, with the tax on mutual funds, the Budget has created a level-playing field between bank deposits and MFs. The entry of banks has been encouraged with continuous authorisation of bank licences. By focussing on fiscal prudence, rural and urban infrastructure and bank capitalisation, NPA issues, the Budget has turned out to be strongly positive for the banking sector.

SS Mundra, CMD, Bank of Baroda

The Budget fell short of expectations while the market was looking forward to some meaningful reforms. What we found instead were a set of proposals that were neither bold, nor clear. It’s more or less status quo. The FM retained the fiscal deficit at 4.1 per cent of GDP, but unfortunately, there is little information on the road map to getting there. The Budget is unequivocally positive for the infrastructure, manufacturing and banking sectors. However, no incentives were given to the pharma industry. There is a need for the country to have universally accessible, affordable and effective healthcare and in order to do this, it is imperative for the Government to offer tax incentives to encourage innovation in R&D and assist in developing and honing Indian IP – none of which has been addressed.

Having said that, there is some renewed focus on healthcare in rural areas. Setting up research centres on TB towards affordable healthcare, along with four new AIIMS is a welcome move, but what really needs to be done is the expansion of the healthcare budget, new investments to create medical infrastructure and ramp up the existing public health structure, investments to promote local manufacturing and research – which was missing in the Budget.

Ramesh Swaminathan, Chief Financial Officer, Lupin Ltd

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