Ramamoorthy said that the formation of asset reconstruction companies for banks with a high level of non performing assets would help weak banks to concentrate on improving their credit offtake and deposit mobilisation instead of worrying about debt recovery.

According to S Sundarajan, Professor, IIM, Bangalore, the the proposed fiscal deficit of 5.6 per cent coupled with revenue deficit of 3 per centof GDP will put pressure on the inflation rate and exchange rate.

While the finance minister has announced an increase in the savings rate of the economy to 30 per cent, no measures have been announced to help mobilise the savings. Similarly, no measures have been announced to help restore export growth to respectable levels. The government has also shifted focus from foreign direct investment to NRI investment. Apart from introducing some derivatives to hedge risk, no major steps have been taken to restore confidence in the stock markets.

Ramamoorthy and Sundarajan were panelists at a discussion organised by KPMG following the presentation of the budget by the Union Finance Minister, Yashwant Sinha.

Commenting on behalf of the small scale sector in the state, M G Prabhakar, President, Karnataka Small Scale Industries Association (KASSIA) said while the strengthening of NABARD and the independence of SIDBI from IDBI are welcome moves, no specific guidelines for the purpose have been announced in thebudget. He further said that the abolition of the ``inspector raj'' has been welcomed by the small scale industry.

However, the rise in petrol prices together with the imposition of increased excise duty on petrol will have its cascading effect on prices of products. While welcoming the proposals for privatisation of the insurance industry and replacing of FERA with FEMA, M K Ramachandran, Vice President, Greater Mysore Chamber of Industry (GMCI), expressed concern at the government's decision to reduce the scope of MODVAT utilisation from the earlier 100 per cent.

According to P R Brahmananda, Former President, Indian Economic Association, the net rise in import duty implies a concealed devaluation of the rupee, yet the forward premium on the exchange rate has risen; it is not clear, how the full impact of the sanctions on the exchange rate can be avoided.

C Valliappa, Chairman, Karnataka Textile Mills Association said that the textile industry has welcomed the formation of the Cotton TechnologyMission with a corpus of Rs 60 crore.