Post Budget Reactions

Prominent personalities speak out

Mr. H.D. DeveGowda
The Indian Prime Minister
The objective of the Union Budget for 1997-98 was to improve the condition of economically backward people and eliminate poverty through rural and agricultural development.
" The Budget has given a thrust to rural development, agricultural sector, social sector and poverty elimination" He said in post-budget reaction.
" We have launched five new programs to help the poor sections of the society and those who have been neglected for long." he said and mentioned programmes like Ganga Kalyan Yojana for providing water in villages and the
Kasturba Gandhi Shiksha Yojana to establish special schools for girls." Over Ten lakh unemployed youth will assistance in the new program and we hope to make this to 50 lakh in the 9th Plan." Mr. Gowda added.

Mr.MADHAVAN: Indian Excise Regulations Expert

  • Landmark budget - extremely good and will have bullish effect on the stock market.
  • Proposal on indirect taxes - decreases in customs duty from peak of 50% to 40% in general for import on all capital goods projects impact on stock market will be bullish.
  • In the Information Technology Industry the rationalizing of excise duty rates across the standardized and of four rates 8%, 13%, 15% and 18% with minor exceptions has been a boost.
  • Earlier excise duty bands have been lowered i.e. 20% to 18% & 15% to 13%, 10% to 8%. Basically a reduction in excise duties across the board.
  • For consumers it is positive as excise duties involving basic
    consumption goods have been reduced.
  • In case of FIIs overall ceilings reduced to 30%. Good for stock market already increased by 130 points. It is very bullish - landmark budget.
  • To close with " I wonder the way the Finance Minister has put the card on the table".

Anil Rai
(CEO Usha India.)
  • In general the budget is good.
  • Social sector outlay increased by Rs.3000 crores.
  • Tax base increased. Inclusion of service tax has been positive.
  • This is a relief to the companies indirectly who have been the main tax payers until now.
  • Removal of tax on dividend will help the stock market.
  • Voluntary Disclosure Scheme (VDA) - not so sure. If these are made regular it will encourage people to evade taxes and come out during such schemes. They will get away by paying lower taxes. This is a penalty for paying tax on time.
  • MAT not removed.
  • Removal of tax on dividend is good. This tax is payable by the companies @ 10%.

Mr.Vipin Malik
Chartered Accountant
  • A very good budget more than expected for individuals and companies.
  • The MAT has been removed by directly giving credit of advance tax.
  • Promoted savings requiring companies to main dividends for capital investment.
  • VDS- inspite of policing not enough control in the past. A matter of educating the people, honest people have to suffer. The past cannot be undone. Thus education is the best policy.
  • Demands of IDBI, SHMI, FICCI etc. have been met. Now they should
    pass the benefit to the consumers.

Economist, Dean - IILM
  • Nothing exciting, overall some good and some bad points.
  • Overlooked ensuring of effective resource allocation and mobilization. The allocation to poor income groups, rural sector barely covers inflation effect, the enhancement in real terms is negligible. So in this regard not sufficient.
  • Direct tax- Good news from the public point of view as rates have been lowered. At the same time enhancement of the bill regarding recognizing person owning four wheel vehicles, immovable property, telephone and who had traveled abroad in the previous year in metropolitan cities as a tax-payer and puts pressure on the non-tax-payer.
  • From the experience of advanced countries people are expected to comply more with lower tax rates as witnessed in the past when reduction inn tax rates has been followed by higher revenues, public compliance
    seen in positive light.
  • Educational sector allocations as such have become quite routine features-towards primary, secondary education are on the same lines as in the past. Cannot be expected to bring about any major change.
  • Resources have been allocated without providing any mechanism to ensure effective distribution & use for the intended purpose. "If the past has been any guide, money was not really the problem".
  • Foreign investment scenario- some surge inn the stock market now, at least for sometime as measures involving capital market and foreign investment are definitely positive and for now will get build to people's expectations, may be with time it will become passive again.
  • Industry had more expectations specially with regard to MAT. However, export profits have been exempted and five years credit offered- impact from that point of view is not enough with regard to actual expectations- mixed reactions in business.
  • Some turnaround but not enough.

Taxation Expert, Ex-member CBDT

In the field of direct taxes, the finance minister has announced a number of innovative steps to widen the tax base and to reduce the tax burden on companies as well as on personal taxation. In the case of companies, effective tax rate has been reduced from 43% to 15% and at the same time the provisions of MAT have been relaxed by exempting the export profits completely and by introducing the system of credit in respect of taxes paid under MAT for subsequent five years. The double taxation of dividend income in the hands of the company as well as in the hands of the shareholders has abolished, though tax 10% on the amount of dividend distributed will be levied in the hands of the company. The tax on foreign companies has also been reduced from 55% to 48%. These steps will give a major boosts to the industry. In personal taxes, the tax burden of an average taxpayer has been reduced considerably by lowering the maximum marginal rate from 40% to 30% on income above Rs.150,000/- and from 30% to 15% to 20% and 10% in other slabs. The moderate rates of taxes coupled with complete exemption of the dividend income will promote voluntary compliance of tax laws and is also likely to reduce the tax evasion.

Taxation Expert, Asstt.Commissioner of Income Tax

Budget 1997-98 is extremely good. It is going to usher in an era of hope and voluntary compliance of tax laws. Reduction in tax rates both personal as well as Corporate is going to boost tax collections by encouraging more and more people towards voluntary compliance when tax evasion may become a thing of the past. Increase in standard deduction to Rs.20,000/- will give greater relief to the salaried class who were hit hard by inflation. Reduction in rates for companies, abolition of surcharge on companies, abolition of provision relating to MAT will boosts industrial progress and generate more employment. Abolition of tax on dividends will attract more investments in companies thereby improving investment climate. It will also help in revival of primary/secondary capital market making availability of large need capital available for the industries. Introduction of Voluntary Disclosure Scheme is also going to set in chain action towards healthier economy by making much needed funds available for investments in commerce and industry and infrastructure facilities.

Shri Jaswant Singh
Member of Parliment
The concessions given to the industry were over due. His concern was more on infrastructure activity in the country. Infrastructure cannot boost the economy by tax concessions but by long term policy and giving boost to the financial sector which has not been covered by this Budget. He stated that about energy sector nothing has been said in the Budget. Petroleum prices have not been touched.

The tax regime is to be reformed and the administration has to be strengthened to bring it to the international level and not only by the tax rates. He said that Mr.Manmohan Singh initiated the process of reforms which were overdue but implementation is lacking.

Regarding agricultural sector, no concessions or incentives have been announced. There is no mention of irrigation facilities and bringing more land under cultivation for which no allocation has been made in the budget. The Economic Survey of India envisaged inflation of 54.5% in cereals and about 17.5% in the oil sector. The inflation will increase with the proposals in the Budget.

His view was that more money should have been allocated for the modernisation of Defence. Provision of Rs.3300 crores has been made in this Budget to implement the recommendations of the Pay Commission. The Government has yet to decide in which form it is to be given to the employees; whether in cash or in bonds or partly in cash and partly in bonds.

Mr. Prem Kumar
President of the Madras Stock Exchange
Union Budget 1997-98 for meeting the expectations of the Capital Market and expressed the hope that the markets would perk up in the near future
" The impact of the budget will be quite good on the bourses. He has granted all the demands of the markets."

Mr. Atul Behari Vajpayee
Former PM
This years Union Budget was not growth oriented and would cause inflation. Headed that it would impose burdens on the common man in the fields of services railways and postal services.He said there was no proposal in the budget to encourage capital investments in the agriculture sector. The Government promise of granting autonomy to RBI is only half-hearted. While no steps were taken to encourage SSI's.

Mr. Somnath Chatterjee
The CPI(M) leader
The budget as pro-poor and growth oriented but expressed apprehension that the lowering of import duties might have an adverse effect on Indian industries.
Mr. Chatterjee said though the tax burden on the common man lowered, " It would be crucial to see how the centre widens its tax net or else there
might be some difficulty in meeting the revenue receipts.

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