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India's general Budget for 2008-09 was perceived, in this part of the world, to be an exercise with an eye on elections that had short-term drawbacks for investors, especially FIIs, and nothing in it to promote NRI investments.
"The Budget is in line with expectations. With the election year fast approaching, the Finance Minister has proposed a populist Budget aimed at using fiscal measures to boost growth and control inflation," said Anirudh Sarathy, analyst for StreetEdge Investments in San Ramon, California.
Finance Minister P Chidambaram raised income tax exemption limit to Rs 1,50,000 for individual assessees, to Rs 1.8 lakh for women assessees and Rs 2,25,000 for senior citizens, besides restructuring tax slabs.
"The proposed cuts in direct taxes and increases in the tax threshold of individuals will help increase consumption and maintain growth; while cuts in excise duty will keep inflationary pressures under check," Sarathy added.
"A short term drawback for investors, particularly FIIs, will be the increase in short term capital gains tax from the present 10 per cent to 15 per cent" Sarathy noted.
"The key for the FM will be to keep growth on target during the fiscal year 2009. How they manage interest rate policy to curb inflationary pressures while not hindering economic growth will be the driving force behind the underlying movements in share prices. If we believe the FM can achieve this successfully, it's quite possible we'll see the Sensex upwards of 22K-23K by this time next year" he added.
"The 8 per cent growth is very commendable and on the whole it is a good budget" remarked Kamala Edwards, president of the Indian American Leadership Council.