Budget 2012: Use disinvestment to cut fiscal deficit, says Arun Nanda, Chairman, Mahindra Lifespaces

NEW DELHI: Acknowledging that the government may not cut expenditure and subsidies, a year before elections, Arun Nanda, Chairman, Mahindra Lifespaces said that Union Budget 2012-13 would be more of a populist than a radical one.

In an interview with ET Now, Nanda recommended the use of disinvestment to cut on deficit. He also said that the Finance Minister, Pranab Mukherjee should focus on inflation and availability of money in the economy. With a high rate of inflation still ailing the economy, he felt that tax rates should be maintained at status quo.

Arun Nanda feels that the implementation of the Direct Tax Code ( DTC) has been long delayed and that it is required to bring a steady tax regime in the country. He further emphasised the need for political parties to move beyond their differences to agree on the Goods & Services Tax (GST). The government may expand the service tax net in the Union Budget 2012-13, he added.

Nanda expressed his concern over the food subsidy bill. "If anything makes me lose sleep after NREGA, it is the food subsidy. On both counts it is a cost to the exchequer," he told ET Now. Nanda admits that there is need to find more innovative methods of feeding the poor. NREGA, he says was a well meaning initiative by the government, but has backfired.

Talking about the real estate sector, Nanda said that the government should take measures to promote affordable housing for people who earn Rs 8,000-10,000 a month. "Some incentives in that area, may be a better tax credit or some sort of a fund should be provided," he said.

Nanda advocated a case for promoting Foreign Direct Investment (FDI). He is of the opinion that not only do the markets need money, FDI inflows strengthen the rupee as well. According to him, FDI in retail would greatly benefit the farmers.

Asked about the expectations from the Union Budget, he expressed hope for educational reforms. Management of fiscal deficit and improvement of skill development also formed part of his budget wishlist.