Union Budget 2011-12 maintains status -quo

Union Budget 2011-12 maintains status -

The success of the budget will count on how the ministry is able to implement and execute on their proposal

This is a "status quo" budget. There is no big bang reform propelling India to the next stage of growth. However, getting down the fiscal deficit while predicting a 9 percent GDP growth is creditable. The success of the budget will count on how the ministry is able to implement and execute on their proposal. In the absence of a clear path to reforms, we perhaps have to depend on Pranab Mukherjee’s past history to steer the Indian economy successfully this fiscal year. From a general insurance perspective there is very little the budget offers. For this sector, we were expecting more reforms for financial inclusion, woman empowerment and senior citizen benefits. Overall What we have to watch out for is Pranab Mukherjee's commitment to reducing the fiscal deficit. Unless there are clear indicators on how subsidies are going to be stabilized and controlled, the 4.6% commitment seems ambitious. While for the banking sector there is greater thrust on capital infusion for ensuring capital adequacy, we expected a similar proposal for the increase of FDI to 49%. Currently for us it’s a wait and watch on what further defines liberalization of the policy There is some progress made in the infrastructure sector, education sector and housing, with the increase in the exemption limit by 5 lakhs with 1% concession. The personal tax exemption for senior citizens and the introduction of the new special senior citizen category with even higher tax exemption is a positive. However, this remains restrictive. Some of the core issues relating to funding for retirement as well as ways to address problems caused by rising health care costs especially for the elderly has not been addressed. Its high time there is a move in encouraging the growth of alternative vehicles. The National Mission for hybrid and electric vehicles is the first step. But the success of this will depend on the action plan that will be laid out for inducing growth of India as a manufacturing hub From a general insurance industry perspective Rural propositions are more focused on the agricultural sector. Micro insurance products should ideally have been exempted from service tax. This would have triggered penetration of the insurance sector into the rural markets. With the rising medical inflation its disappointing that the 80 D benefits remain unchanged and neither are there any significant attempts made to increase health care infrastructure. This will lead to increased healthcare costs and consequently to rise in health insurance premiums.