Arun Firodia Chairman Kinetic group

My first reaction is that it is a realistic and pragmatic budget, in tune with economic fundamentals. The direction given to the economy is positive, and there is a definite move towards fiscal responsibility.

The welcome features are reduction in subsidies and interest cost to government as well as to industries, simplification in indirect and direct taxes, exemption of long term capital gains tax on re-investment in primary issues. This will be a boost to the capital market.

As for the reduction in dividend tax, we wanted it to be done away with entirely because it is a form of double taxation, but the reduction is welcome.

The automobile sector stands to gain by way of reduction in special excise duty of 8 per cent,

while it will kickstart the commercial vehicle industry and give the ancillary industry a boost.

One point where there is concern is the Finance Minister talking of downsizing the government by 2 per cent per year, and 10 per cent over five years, which is too little. What is needed is a reduction of 10 per cent every year to contain the fiscal deficit. There is no other way to reduce government expenditure and mounting staff expenditure.

Also, a scheme for VRS in the government would have been well received. Banks VRS has been a success.

The Finance Minister has tried to enlarge the tax base by adding more people in the 1/6 scheme extending it to all urban areas and to service providers. One note of caution is that the cost of collection of tax should not go overboard.

With regard to the entry of second hand cars and other vehicles, we do not have the exact notification, and there are bound to be tariff and non-tariff barriers. No move should be made that will harm the auto industry in the country that contributes 10 per cent of the GDP. No decision can be taken without considering the ramifications. Even if cars are to be allowed in for the benefit of the consumers, it will also hurt the consumer by taking away from a national industry that contributes to 10 per cent of the GDP. Therefore you need to have a balancing act for a country like India, where employment is also an important issue.

On the other hand, the government can do better with regard to encouraging private investment in the infrastructure sector by encouraging them to use their resources for infrastructure building, without requiring to reveal the source of such funds. Such investment in the sector will speed up the growth of the sector and revolutionise infrastructure, which will boost all other sectors of the economy.