The Hindu Business Line : Encouraging competition

I have had the fortune to visit three of the four BRICS countries in the past year — Brazil, China, and of course, India — and have noticed the multi-layered nature of the massive economic changes that are taking place and ensuring these countries their place roles as future growth engines of the world. While several economic, cultural and social factors are common to all three, India has a few lessons to learn from Brazil and China. The one big advantage they have over us is a level of infrastructure that is comparable to developed countries. Today, I noted with great happiness, significant steps in the Budget that are sure to make India competitive on this front as well.

There are several commendable changes — thrust to social justice through a variety of programmes, encouragement to long-term savings and as a corollary, infrastructure and rural development, and maintenance of fiscal discipline.

On the taxation front, broad stability with minimal change has been on expected lines. The increase in service tax, along with inclusion of more services under the net, was also expected. Similarly reduction in peak Customs duty and rationalisation of excise duties was no surprise. The Government's decision not to change anything on the personal and corporate income taxes is commendable as frequent changes create unnecessary uncertainty.

The Finance Minister has introduced two positive changes that will help ensure post-retirement financial security and boost the growth of the pensions industry.

The first of this is the removal of the sub-limit of Rs 10,000 for tax-free contributions to pension policies, thereby allowing individuals to save up to Rs 1 lakh towards such plans. Last year's Budget introduced a fringe benefit tax (FBT) on employers' contribution towards super-annuation.

However, in line with the aim to promote long-term savings and post-retirement financial security, this year's Budget has made contributions towards super-annuation fund, upto Rs1 lakh per employee, exempt from the ambit of FBT. These moves are sure to boost investor confidence.

(The author is CEO & Managing Director, ICICI Prudential Life Insurance)