Here are a few budget reactions from the corporate world sent to me by the respective PR agencies. While some are lauding Pranab, others are not too happy with him. As a layman, I am only happy with Pranab for making it a rural-focussed budget. After all, a large part of India still resides in the villages. Farmer loan waiver, social security for the rural youth and focus on education is definetely something I am completely in favour of.
Without further ado, here is what the corporate world has to say about Pranab’s budget:
Gaurav Dua – Head Research , Sharekhan Ltd
The Union Budget has fallen short of high market expectations. The street has reacted negatively to issues such as high projected fiscal deficit of 6.8% (and more importantly there is no roadmap of bring it down), no mention of reforms in petroleum and insurance sectors, and absence of focus on aggressively pushing ahead the divestment program. On the positive side, the Finance Minister announced specific measures to enhance investment in infrastructure and boost domestic consumption through lower tax burden (higher standard deduction, withdrawal of surcharge and education cess). Overall, the focus continues to remain on stimulating economic growth in spite of further deterioration on fiscal front.
Vijay Bobba, CEO, I-Mint
The government has taken specific measures to increase disposable incomes. With a more friendly tax structure, individuals will have more cash in hand which may lead to increase spending and hence augment demand. Exemptions and reductions on excise and service tax on specific areas will also lead to additional margins that can be passed on to the end consumer. Also, the budget aims to rationalise taxation policies with the introduction of the GST next year. However, from a retail perspective, FDI was a major issue which has not been discussed.
SC Agarwal, CEO, Indian Tools Manufacturing, part of Birla auto and engineering group
The Budget appears to be neutral to Cutting Tool Industry. Due to increases in Planned Expenditure, allocation for rural employment and additional disposable income on account of individual Income Tax benefit, consumption level can be sustained in the short term. Private capital investment in the Industry may not get stimulated soon until Engineering Goods Export and Commercial Vehicle Sales improve.
Kaushal Sampat, Chief Operating Officer – Dun & Bradstreet – India
The Union Budget 2009 -10 is largely positive, and seems to be an ‘aspirational’ budget in terms of what it seeks to achieve over a long term horizon. As we had expected, the Budget clearly breaks down into three parts – short, medium and long term. The short term proposals, which are focused on economic revival, are slightly above our expectations, and are welcome for the support they’d provide to an economy which is expected to get back on the revival path soon. Of course, these measures would have been even more welcome if a specific road map for containing the fiscal deficit had been laid out for the medium term. Having said that, the government does not have too much room to maneuver and perhaps, living with a high fiscal deficit may be inevitable for the time being. As economic revival sets in, and the high fiscal deficit becomes a potential bottleneck, monetary policy may have to be appropriately adjusted to take care of the issues pertaining to fund availability – which in itself may not have too much room. Hence, over the medium term, concerns remain over the fiscal deficit. The positives contained in this budget will become most apparent over the longer term, and that is where it scores the most – provided the intent and aspiration is met. While disinvestment could have found greater articulation, there seems to be a positive movement in that direction. The large number of measures proposed with regard to institutional, procedural and regulatory reform in such diverse areas as petrol prices, taxation and growth inclusiveness will unlock much of the economic growth potential. As the FM indicated, one budget speech will not solve all our problems! Hence, we may see some key policy initiatives being taken off-budget.
MS Arora, CEO, Zenith Birla, flagship company of Yash Birla Group
It is good to note that the Excise duty rates on Steel related products have not been increased from present 8.24% it will help in demand to grow in the country under these trying times. However no change in the policy, on Restriction to be removed on Flat Steel import is a negative aspect as this will create & increase the imbalance in the prices of steel in the domestic market. Removal of FBT is a welcome step which will help eliminating the cumbersome procedure to keep a track of figures under this head. No initiative to boost Exports to steel product related industries is a cause of worry and hope that the forthcoming Exim policy will take steps to help the declining figures of exports.
Yash Birla, Chairman, The Yash Birla Group
The Budget 2009-10 is all about getting the India Growth story back on track. This is targeted to be achieved through the short and long term measures that have been introduced. The unique aspect of focus on efficacy of delivery mechanisms for various measures is heartening. Due importance to infrastructure has been rightfully given as well as a boost to exports which will stimulate the sector that has been languishing. The disinvestment announcement is welcome but the targeted amount could have been higher which would have freed up resources to invest in the various social schemes that have been announced. This is in short a budget that aims to jumpstart a economy that has slowed down which is good but it could have been more aggressive. For our Group, the positive measures announced for Education, Textiles, IT, Exports are welcome and would give a fillip to our group companies in this sphere.
Kalyan Bhattacharya, President& CEO, Birla Power Solutions Ltd
The increased budget allocation on social development schemes with focus on health and education for the rural population is indeed a right step for the ‘inclusive growth’ highlighted in the pre-budget survey. The areas which will allow BPSL to increase its contribution towards national development are:
1. National Rural Health Mission
2. Mission in Education through ICT’
3. Construction of Roads/Infrastructure
4. Public Delivery Services
The increased allocation of funds for Agricultural Development and Irrigation, is a welcome move, though there is no ‘special incentive’ for companies like BPSL which is producing Power Tillers and fuel efficient Pumps for the marginal farmers in less developed states in the East and Northeast.
The budget mentions about the Power Reform Program. However, it is unclear about the incentives available for private sector to join the PPP for investment in power generation and expansion of the distribution system in the rural areas. The budget is not encouraging for the manufacturing sector. No new initiatives are visible and there is hardly any incentive in terms of tax and duty benefits for the organized sector in the engineering industry. Overall, the budget is an average one and does not fulfill the expectation of a key driver for industrial development.
Som Mittal, President, NASSCOM
The Finance Minister’s decision to extend fiscal benefits available to the industry under Section 10A/10B for one year will help the industry mitigate the impact of the current economic environment and help India retain its competitiveness.
Pramod Bhasin, Chairman, NASSCOM
Many of the initiatives in this year’s budget recognize the role the IT BPO industry can play in promoting inclusive growth and creating substantial employment opportunities in the country. The industry will be keen to partner with the Government in expanding e-governance initiatives including modernization of employment exchanges, the UIAD project, and smart cards for healthcare services so as to achieve enhanced governance. Increased capital outlays on the education and infrastructure sector will also address growth challenges that the country has faced.