New Delhi,(GGS NEWS) 28 Feb 2011 : Finance Minister Pranab Mukherjee’s third Union Budget for current term of the UPA government got a thumbs-up from the Indian industries, which hailed it as the growth oriented one.
Reacting to the Union Budget, Confederation of Indian Industries (CII) President Hari Bhartia said, “This is really a growth-oriented budget”. He, however, said the Finance Minister should have given more stress to the health sector and the demand for treatment of healthcare as infrastructure has been overlooked”.
The slew of measures announced by the Finance Minister to push economic growth on fast track, stirred-up exhilarated reactions from economists as well.
Terming the Budget as balanced, HSBC India country head Naina Lal Kidwai said: “The Finance Minister has allowed the growth agenda to stay on track.”
She also said the Budget has also set the direction for financial sectors reforms with Mukherjee promising take forward many pending Bills in Parliament soon.
FICCI President Rajan Bharti Mittal said the Budget is balanced and will sustain the growth momentum, while giving main emphasis on agriculture and manufacturing.
However, not all industries were happy with the Budget proposal, especially those in the iron ore mining sector which will now have to pay 20 percent export duty.
“Iron ore industry will not be able to absorb it (export duty 20 percent). It will affect export earnings of the country,” Roongta Mines Ltd President Siddharth Roongta said.
Expressing similar views, Kotak Mahindra Bank Vice Chairman and Managing Director Uday Kotak said, “Budget is positive for the equity and bond market. A 4.6 percent fiscal deficit is looking like a very good number.”
He said the auto sector was expecting a hike in excise, which has been kept unchanged at the existing levels.
“Budget has positively surprised us,” he said, adding the “Budget has done better than normal expectation”.
He, however, said that the income tax relief provided to general tax payers as “marginal move” as it has been increased by only Rs 20,000 to Rs 1.80 lakh from current limit of Rs 1.60 lakh.
Principal Economist for Deloitte in India Shanto Ghosh said: “Overall, the policy prescriptions outlined in the Budget were lacklustre and can be considered more of tinkering around the edges without ushering in radical reforms.”
Ghosh, however, said the commitment to refrain from additional borrowing to fund the fiscal deficit will certainly help retain the momentum in terms of private investment that is critical to sustained growth.
Although there were no specific measures, such as allowing FDI in multi-brand retail, Future Group Chief Kishore Biyani said the government is showing its recognition through the Budget what the modern retail has been saying so far.
“The announcements made to strengthen the farm sector, cold chain investments and recommendations to amend the Agriculture Produce Marketing Committee (APMC) Act are all indicative of the government`s will,” he said.
“All the measures announced today are a precursor for things to come,” Biyani added.
Expressing satisfaction over the various proposals of the Budget Adi Godrej, Chairman, Godrej Consumer Products said, “I think the most important thing is that he has clearly given a signal of GST coming through soon…that is a major development which is very welcome as it will help us solve a lot of macroeconomic issues, including inflation, fiscal deficit and help GDP growth.
However economist Shankar Acharya was upset with the fate of the multi-brand retail segment in the country.
Jaithirth Rao, Indian businessman and former CEO of the software company MphasiS said that it was an average budget.
Sunil Bharti Mittal, Chairman and Group CEO of Bharti Enterprises seemed happy with the budget. Reacting on the Union Budget the entrepreneur said, “Good that there are not too many social schemes”.
ENAM Securities Chairman Vallabh Bhansali said, “He (Mukherjee) has succeeded in fighting all populist forces I am happy with what he has done.”
V Vaidyanathan, MD & Vice Chairman, Future Capital Holdings said, “maintaining government borrowing at 3.4 lakh crores is a big relief, and achieving it despite not touching excise rates is a great job. The budget has spelt (out) reforms in Foreign Direct Investment in insurance, banking, infrastructure, despite not being very explicit about it, probably deliberately.”
Vardhan Dharkar, CFO, KEC International said, “It (the excise duty exemption on power equipment supplied to mega and ultra mega power projects) will correct the anomaly that existed between Indian suppliers and international suppliers who get customs duty exemption on power equipment supplied to mega power projects and will create a level-playing field for both.”
MS Unnikrishnan, MD, Thermax said, “certainly it (excise duty exemption on power equipment) will improve the competitiveness of Indian manufacturers (of capital goods)…We would certainly look forward to the terminal duty to be totally waived off with all input moved facilities being allowed…That is not enough but that is a move towards the right direction. “There is nothing which is substantially announced in the budget. It is a very normal budget.”
Akhil Jindal, Director, Welspun Group said, “There was no mention of TUF (technology up gradation fund), no mention of any subsidies – this (textiles) is such an employment generation unit. This is quite surprising. For textiles, I don`t think there was any sop, unless I missed something in the speech.”
Pranabh Mody, president, JB Chemicals said, “added tax exemption for outsourced R&D from 175 percent to 200 percent is a good step but that would be neutralised by the hiked MAT and surcharge.”
“There is nothing significant in terms of reforms and issues related to tax exemption for export units remain ignored while SEZs will face added taxes.”
Vinay Kshirsagar, CFO, Shreyas Shipping and Logistics said, “as far as shipping industry is concerned the Finance Minister has removed duty on imports of spares. This is a direct benefit for domestic shipping firms as repair costs will go down. He has also allocated funds for warehousing and announced steps to improve cold storage chains. This will indirectly help the logistic industry. He has taken note of the bottlenecks in supply chain process and there is an attempt to reduce the bottlenecks for the sector.”
“For the sector, another good development is reduction in surcharge from 7.5 percent to 5 percent. So as the surcharge comes down, even with the base MAT rate being hiked from 18 to 18.5 percent, it (the effective rate) remains unchanged.”
Arvind Parakh, Director, JSL Stainless said, “For the stainless steel industry, the budget has been very positive. Import duty on scrap, which was 2.5 percent, has been brought down to zero. Also, on ferro-chrome he has rationalised the import duty, we have to wait and see. So, net-net, it is positive for the industry as it will help us reduce the cost on an average by anywhere between $40 and $50 per tonne.”
Nittin Johari, CFO, Bhushan Steel said, “The increase in export duty on iron ore will increase its availability in the domestic market, thereby stabilising price and helping domestic steelmakers.”