DREAMY:

Markets cheer India's budget (Asia Times. 3/01/05)

India's Finance Minister P Chidambaram Monday unveiled his budget - the government's annual exercise of presenting the books and stating the economic policies to be followed in the coming year - that aimed at combating poverty, significantly changed the tax structure and showed signs that foreign direct investment (FDI) in more sectors might soon be liberalized. [...]

Further liberalizing state-controlled banks, the finance minister proposed a bill to amend the current bank law and indicated that FDI in the pension, mining and trade sectors would be liberalized. Foreign-fund holdings' limit in state-run banks has been raised to 24% from 20%. FDI in private banks, it was announced, would be relaxed to 74% from 49%. [...]

Chidambaram also announced steps to strengthen the capital market. Foreign institutional investors will be permitted to submit appropriate collateral when trading in derivatives on the domestic market. Market regulators will be asked to permit mutual funds to introduce a gold exchange-traded funds scheme to enable any household to buy and sell gold in units for as little as 100 rupees - about $2.

The captains of Indian industry hailed the budget, some even going as far to call it a "dream budget". Tarun Das of the Confederation of Indian Industry, an industry body, said: "We are on a good wicket as far as the economy is concerned and reforms are on track. There are so many positives that it is difficult to find negatives."

A large measure of relief has been provided to middle class income tax payers, with a change in tax brackets. Chidambaram also spelt out wide-ranging changes in the indirect tax regime, bringing down the peak customs duty on non-agriculture products to 15% from the existing 20%.