India budget lacks game changing reform: Corporate America
Markets will look to consolidate in the week ahead after most event risks like monetary policy and budget now over.
The US industry has said India's Budget for 2012-13 lacks the much-needed "game changing reforms" and called for a 'transparent' taxation policy to attract more foreign investment.
The US India Business Council (USIBC), in an unusual short reaction, called Union Finance Minister Pranab Mukherjee's Union Budget "measured but without game-changing reforms".
The council noted it expects the coming Budget Session of Parliament to deliver on key reforms that would signal to foreign investors that India remains steadfast in its objective to achieve strong economic growth and expand global trade.
Several policy announcements, especially in taxation, raised concerns, USIBC said.
"Given continuing apprehension about the anaemic global economic recovery, India's policy environment must compete aggressively for international investment. For foreign investors to have confidence in India, a predictable and transparent tax environment is essential," USIBC President Ron Somers said.
"USIBC encourages the Government of India to support the Supreme Court decision on Vodafone and avoid any regressive policy changes. The 2012-2013 Budget's progressive reforms in civil aviation, infrastructure, and capital markets should not be undercut by inconsistent tax policy," Somers said.
However, the council welcomed the liberalisation of FDI and external commercial borrowing in civil aviation, as well as allowing qualified foreign investors to directly invest in corporate bonds.
It also hailed an "increase in defence spending at a time of essential national security and technology cooperation". Diane Farrell, Executive vice president of USIBC, said: "Predictability is vital for attracting and keeping the foreign investment necessary to attain the growth projections stated by Mukherjee."