Keki Mistry, Vice-Chairman and CEO of India’s biggest mortgage lender Housing Development Finance Corporation (HDFC), has said he expects the government’s target of keeping the fiscal deficit within 5.3 percent of GDP to be met in Budget 2013, due on 28 February.
Outlining his expectations from the forthcoming Union Budget for 2013-14 in an interview with Firstpost, Mistry said keeping the fiscal deficit within bounds would be the ‘single biggest attraction’ for foreigners, who had been concerned about runaway government expenditure and current account deficit driven by heavy subsidy costs. “My hope and expectation from the Budget is that the fiscal deficit will be kept under some check. It will be extremely positive then,” Mistry said.
On raising taxes, Mistry said he hoped the finance minister would not increase tax rates, but would rather concentrate on widening the tax net to garner more revenues. “If you see the number of people disclosing incomes beyond Rs 10 lakh to Rs 30 lakh a year, it’s very small. I think it’s important to bring in more people within the tax net rather than increasing the rates.”
HDFC, which is also the majority stakeholder in HDFC Standard Life Insurance and HDFC Ergo General Insurance, said while opening up insurance further to foreign investment need not really be a function of the Budget, any announcement on that would be a positive for the sector.
On the home loans sector, he said while he would not want to seek fiscal benefits given the government’s huge deficits, there is a case for a higher cap on tax deductions on interest paid on housing loans. The limit is currently Rs 1.5 lakh a year - which has been around for the last seven years or more when inflation had raised house costs significantly.
“Over the past 7-8 years a lot of things have happened, so there is a case for enhancing this limit. Whether the government can do it I don’t know. But if it happens, it will be a big boost to the construction sector and that will aid GDP further and create more jobs,” he said. There was data, he said, to suggest that as many as 276 industries -- big and small - depend on the housing sector and those would get a boost if the limit was enhanced.