Mumbai, Jul 5 (PTI) Billionaire banker Uday Kotak has rallied behind the government to justify higher taxes on the super rich, saying those earning more should look at the tax burden as their "contribution to a new India".

He said also Prime Minister Narendra Modi has "rightly" said the rich need to pay more.

"...(rich) Indians should accept it as a fair bit of a contribution to a new India," Kotak said, referring to the phrase made popular by Modi after the BJP swept the Uttar Pradesh state elections in February 2017.

If the budget proposal is implemented, the super rich earning over Rs 5 crore will be paying an income tax which will be as high as 42 percent of their earnings.

Meanwhile, speaking on the broader budget proposals, Kotak said there will be a flush of liquidity if the government is able to achieve the fiscal deficit target of 3.3 percent, which will also help the RBI to be "bolder" with their policy rate cuts.

In a statement, State Bank chairman Rajnish Kumar said the budget has the ability to boost the demand.

It can be noted that a dip in consumption growth has percolated down to worries on the broader GDP growth, which had slumped to a 20 quarter low of 5.8 percent for the March quarter of the past fiscal, which for the full-year printed at a five-year low of 6.8 percent.

"Enhanced investment for infra, affordable housing, augmenting lending capacity of public sector banks and NBFCs are major initiatives unveiled in the budget," he said.

Kotak termed the moves on NBFCs as "signalling" which recognises their importance in the economy and hailed the move to shift housing finance companies' regulation to the RBI.

State-run lender Syndicate Bank managing director Mrutyunjay Mahapatra said the government has "reaffirmed its trust" on the public sector banks by committing Rs 70,000 crore in fresh capital.

He said the boost to small businesses, infrastructure and affordable housing will help generate credit growth for the lenders.

Kotak said the announcement to selectively go below 51 percent in select state-run enterprises "is the first step in strategic divestment".

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)