India Inc on Monday cautiously welcomed the Union Budget as a 'job well-done' in trying conditions, but investors reacted sharply to the high fiscal deficit and limited divestment plans and sent the markets tumbling by nearly 900 points.
Tax reforms including abolition of the Fringe Benefit Tax, Commodities Transaction Tax and clear roadmap for GST and steps for a nine per cent economic growth were seen as positives by the corporate sector. However, increase in MAT, the unchanged Securities Transaction Tax and specific sops for sectors like housing and steel invited criticism.
"Hike in Minimum Alternate Tax (MAT) to 15 per cent and no change in STT fell short of investors expectations. We were also expecting withdrawal of surcharge on corporate tax," Manoj Choraria, a leading stockbroker, said.
Planning Commission Deputy Chairman Montek Singh Ahluwalia said that "it is a growth-oriented budget and there is no need for further stimulus."
"The finance minister has done a tight rope walking over a huge distance in a difficult situation," feels apex industry association FICCI.
Economists expressed different views. Prof Jayati Ghosh termed the Budget as a 'corporate budget' with no focus on the 'Aam Admi'. It is unfortunate that social sector especially education has been neglected completely by the UPA government.
Govinda Rao, Member of PMEAC, said that it is a good Budget as the finance minister had little choice. Fiscal deficit at 6.8 per cent is the main worry.