No great sops for the banking industry

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: Budget 2007-08 is in line with the broader agenda of the government's Common Minimum Programme of reforms, in the backdrop of the buoyant economic conditions.

It is a populist Budget, with the elections round the corner. India Inc's concerns have been addressed by raising the budgetary support for education, increasing expenditure on health and welfare, and announcing rural job guarantee schemes.

The expenditure on subsidies and defence has also been increased. Though the Budget has been presented with strong macroeconomic fundamentals at a time of robust growth, no significant forward-looking reform policies, despite expectations, have been outlined, while the rural sector has taken centre stage.

While there has been no major changes in corporate taxation, there has been an increase in levies, in the form of cess on secondary education, hike in the corporate dividend distribution tax rates and an expanded scope of the FBT.

As seen, the stock markets have been lacklustre, more so, in the wake of a global meltdown.

No radical changes have been announced for the banking industry. A slew of measures to enable the regional rural banks (RRBs) to undertake diversified banking have been announced, as a recognition of their role in the financial services sector.

This includes allowing RRBs to accept deposits from NRIs, tax breaks on loan-loss provisioning and benefits under the Sarfesi Act.

The cut in customs duties and laying down the roadmap to a comprehensive GST law by 2010, reiterates the government's keenness on a faster move towards the globalisation of India Inc.