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'Capital account convertibility has been taken to the next stage'

P Krishnamurthy

There has been a positive rationalisation on direct and indirect taxes. Removal of surcharge, reduction of dividend tax to 10 per cent and exemption from long-term capital gains for investment in primary issues are very positive measures.

As a sop to the food processing industry, all processed food products have been exempted from excise duty, which will boost demand and growth.

On the impact on Information Technology, it is positive more on a long-term basis as technical education has been emphasised.

Overall, the Budget is well received. Reactions indicate a positive receipt.

It has addressed the issues of fiscal deficit, stimulus to growth, incentives to the capital market, rationalisation of taxes (customs, income-tax, excise). It has also tried to introduce steps like long-term capital gains and tax exemption for investment in primary market issues.

Capital account convertibility has been taken to the next stage by allowing ADR and Indian shares being fundable. Reserve Bank of India guidelines are expected, but it's a good first step.

The incentive to education is a positive step, by way of promoting higher technical education and financial assistance for studies in India and abroad and are very good long-term measures.

P Krishnamurthy is vice-chairman, J M Morgan Stanley Ltd

Budget 2001

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