'The budget lacks any coherent direction'

Dinesh Kanabar, partner, RSM & Co.

"The Union Budget 2002-2003 presented by finance minister Yashwant Sinha has been one of the most lackluster budgets presented in the recent years. Of all the suggestions put forth by the industry very few suggestions met logical conclusions.

"The distribution tax of 10% has been abolished on the mutual funds. The finance minister has come a full circle. In the first place he had introduced the 10% distribution tax. It is a welcome measure. Though this increases paper work for the company as it has to file TDS certificates for dividends, credit claims etc. I feel that from an individual point of view it is not bad. An individual is liable to tax according to the various tax slabs he falls in. It may be 30% or it may be nil. Income received from mutual fund units will be uniformly taxed at 10%.

"The surcharge, which was expected to be abolished now stands at 5%. But this will hardly make any difference to the individual. The finance minister has taken a retrograde step in the case of tax rebates by introducing the tax slabs. Look at it this way, from pure tax perspective, is the person having taxable income over Rs 5,00,00 interested in availing a tax rebate. But yes you are taking away an avenue from the investor.

"From a broader economy perspective, I feel that the rate cut on small saving schemes is a positive step in the right direction. It does hit the common man in the sense that the yields on these instruments come down. But a better way of looking at it is from the government’s point of view. The government has been borrowing at an astronomical cost since long and will continue to do so till the real cost of borrowing comes down.

"Overall , I would again highlight the fact that this was a very lackluster budget. But we have also to take note of the fact that the finance minister presented the budget in very difficult circumstances. There is a Rs 20,000 crore deficit in the tax collections."

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