Jain, However, is not very happy with the income tax reforms announced in the Budget. He totally disapproves Pranab Mukherjee's idea of issuing banking licences to the NBFCs.
Read excerpts from the interview with Anil Jain on Moneycontrol
Q: Do you think Budget 2010-11 has done justice to the social sector spending?
Yes. The total outlay for social sector spending has been considerable. We should find all the vehicle to ensure that such considerable benefits reach the needy. The adverse CAG report on misuse in various parts of the country is still fresh in the minds of the people. One cannot completely discount the possibility of subversion of funds. This tendency has to go and everyone in the Government have to think beyond the realm of political considerations while framing policies for social sector spending.
Q: In Budget 2010-11, the income tax slabs were broadened which is said to increase the disposable income in the hands of the common man. Do you really see consumption going up due to this?
I do not think so. The Government would have done well to increase the threshold limit of tax exemption from Rs.1.60 lacs to Rs.3.00 lacs thereby freeing people in this bracket from the shackles of income tax. In my opinion, they were the most deserving and suffering the effects of inflation. Reducing the tax incidence on people earning above 3 lakhs is welcome but in my opinion, the Government should have done more for those being belonging to lower income group. Also, considering the high cost of hospitalisation these days, Medical Insurance limits under Section 80D could have been increased.
Q: How will the Budget go down with global investors?
In my opinion, they will adopt a wait and watch approach without deciding either way. However, the jury will be out by the end of the fiscal 2010-11 on the efficacy of this budget.
Q: Which sectors do you see bearing the brunt of excise duty hike?
Automobiles definitely. Also most of the other manufacturing sectors.
Q: In light of fuel price hike, what are your views on the oil marketing space?
Not much. This was expected. The reaction from the public and media borders on the petulant. OMS will have to contend with a bearish trend due to this but in my opinion for a very short time. They would soon be up and galloping with the rest.
Q: Budget has spoken about issuing banking licences to the NBFCs — what do you think of this step?
Very retrogade. The country has not forgotten the year 1997 when most NBFCs fell like nine pins. They require a lot of regulation because of inherent Asset Liability mismatch. An NBFC, unless well established and managed, is in my opinion nothing but a house of cards.
