India

Balanced, Yes, But Industry Expected More

As Pranab Mukherjee, union finance minister, presented his budget for 2010-11 in parliament today, experts from Mahratta Chamber of Commerce, Industries and Agriculture said even thought the overall budget is balance one, they expected more. Here are some reactions from the members of MCCIA:

Mukesh Malhotra (President, MCCIA)

The overall budget is definitely balanced and good and directed towards inclusive growth.  The emphasis on social segment development is also encouraging.  The objective presented by the Union Finance Minister emphasizing on over all growth in GDP targeted at 10% reduction in fiscal deficit.  Structured and improved governance strengthen fund security.  Thrust on infrastructure in rural areas and tackling the supply side pressures on inflation are some positive points in the budget.  However the budget does not specify the production plan or a strategy to bring down the fiscal deficit to lower levels.  We need to examine the final prints of the same.  Overall the budget is very satisfactory; development oriented and will have positive effect on entire economy.

Anant Sardeshmukh (Additional Director General)

Partial Roll back of stimulus was expected but the 2% export subversion has been retained.  This will help exporters including SMEs.  No detailed proposals on disinvestment especially insurance. The outlay of Rs. 64000 Crores for rural infrastructural development is a positive step but unlike last year, we hope that enhanced outlay is utilized to improve the rural infrastructure. Weighted deduction of 200% on R & D will push R & D in industry. Question is whether SMEs would be able to take advantage of this.  The SME segment definitely needs infusion of technology.  A creation of technology development fund for SME was required but the budget has failed to provide such provisions.

Arun Firodia  (Past President & Chairman, Kinetic Group)

Finance Minister has embarked upon various reforms in India’s economy. They are being pursued in an incremental fashion. A more bold approach was called for. Thrust on Rural Development and Infrastructure is very welcome. Basically, Finance Minister wants to earn more revenue by way of growth of economy rather than increasing the rates. This is a very laudable approach.  Net additional taxes of Rs 20,000 Cr is merely 2%- 3% of the total tax revenue and citizens will take 2% hike in excise duty and Rs 1/lit additional duty on Petro products in their stride. Push to Innovation and Education is very welcome and will pave the way for India’s competitiveness in world market. Overall a very thoughtful and sound budget. Kudos to FM.
Increase in outlay for road construction, especially highways, is very positive for Auto Sector although it is proposed to be financed by Private Public Partnership. I wish Government spends additional money for road development from its own kitty. This has to remain top priority item on India’s agenda for next 10 years. 2% increase in excise duty and Rs 1  – Rs2 increase in Petroleum products is a fly in the ointment but is not harsh and will be taken into stride by the consumers. Overall the budget deserves 9/10 for Indian Economy and 7/10 for Auto Industry.

Pramesh Aurora (EC Member & ex-Chairman, Tourism committee)

Excise increase in petroleum will raise polymer prices and further hit the SSI plastics (polymer) industry. With RIL monopoly the scenario is not very positive. 2 Star & above category hotels have been recognized for incentive. This is a good sign.
At least 500 proposed hospitals could be combined with hotels on a PPP basis which would give a cost benefit to the Hotels (Major Equipment) and a boost to the social sector  (Hospitals with this money) i.e use hotel revenue from private sector to allow subsidy to the railway proposed hospitals.

Vikram Salunkhe (Treasurer)

Excise & modvat provision for SSI are welcome. However like everything else the limit should have been raised to provide real benefits to small companies. Reforms in every aspect of Govt. functioning is highlighted by Finance Minister and is most welcome. However good implementation of these provisions is important. Weighted deduction increase will encourage many companies to increase the spending. However the FM has not been very clear on the stand taken on SEZ.

Govind Patwardhan (Chairman, State Level Taxation Committee)

The introduction of goods service tax deferred is not a news. There are many clues that central Government is serious about GST Rollout.  Central sales tax should have been reduced to zero percent as preparation for GST. Substantial reduction in tax on income of individuals will put more disposal money in the hands of citizen which will increase demand for household consumable goods vehicles etc. Provision of 800 crore for computerization of commercial taxes is welcome – State Government shall now reciprocate. It is must for introduction of G.S.T.   Provision for reforms in tax administration & judiciary is need of the hour and hence a welcome move.

S. K. Jain (Vice President)

The Finance Minister has made provisions in all fields. This is a welcome move.
National highway being built at  20 km per day is a good sign. Pollution control & solar power + wind energy will be getting tremendous boost. Increase in allocation for schools is appreciated. The FM has been attentive to the unorganized sector of workers.  Effort in reduction of the fiscal deficit is welcome.  Research & Development gets good boost with increase in weighted deductions ranging up-to 200%.  Retention of 10% as services tax is welcomed, but increase in MAT to 18% is discouraging. Overall it is  a good budget.

Suhas Kadlaskar (Chairman, Corporate Legislation Committee, Director- Corporate Affair Mercedes Benz)

The move on Direct Taxation is very positive. Overall budget given confidence to the economy and it is a definite step to the Growth path of 9% growth rate.

C. V. Chitale (Chairman, Direct Taxation Committee, MCCIA)

Union Budget has made the Individuals and Corporates jubilant.  Various procedural hassles have been removed and are in the lines of Pre-Budget Memorandum submitted by MCCIA.  Considering the contents of the budget, especially about individuals, it seems that now the Tax Payer is considered as a Client. The automation will result in the reduction of manual operations which is a welcome move.

Deepak Shikarpur (Chairman, IT Committee)

This is a Good Budget for the Nation as a whole. Setting up of Technology advisory Group under the leadership of Mr. Nandan Nilekani   is a very good idea. Focus on SEZ and FDI simplification will  benefit exports. Thrust on Innovation in Manufacturing, Academic and Research Organisations i.e. R & D deductions  increase to 200% is a good idea. Reduction of Duties on Mobile Handsets and accessories will benefit all sectors. Concessions to IT/BPO sector, unclear STPI extension not done as such it  will bring software companies under tax regime.

P.C. Nambiar (Chairman, Foreign Trade Committee, MCCIA)

Fair Budget. Addressed vital issues on rural development, Agriculture and infrastructure.  Recognised growth of SEZ as its performance. Extended duty concession to Agricultural equipment, solar energy inputs and Road making machines (especially on the disposal of imported road machinery).  By providing marginal concession given on personal income tax, investment by individuals will increase.

Chandmal Parmar (Chairman, Railway, Road & Traffic Management)

Congratulation to Finance Minister for daily work of Roads of 20 km – per day and allocation of 13% more money (Rs. 19500 crore) for infrastructure development.

Brig. S. B. Ghorpade (Chairman, Defence Committee)

India needs urgently to upgrade defence equipments and state of the art Defence Technologies and take them towards manufacturing capabilities. Defence has not inducted new guns since 1986 after the Bofors deal.  Same is the case for Acro space sector and naval sector.  Air force is down to 34 squanders and its transport fleet is reduced substantially.  Therefore, medium multirole combat Aircraft procurement is in progress.  Navy needs modern submarine etc.  So far as expenditure is only 2.8% of GDP, there is a need for fast finalization of RFP and procurement activity so that the funds are used up.  In past Rs. 4000 crore were lapsed in 2007-08 and more in 2009-10. Increase of Rs. 6000 crore in Defence budget is a positive step but may not be adequate for upgrading for capital expenditure.

Dr.  Sudhir Rashingkar (EC Member)

Emphasis on Food, Education and Health is good. No mention on help to IITs, NITs, Medical education. Less allocation for urban development compared to rural development.
There should have been concern for final assistance for corporate social responsibilities.No relief for senior citizen and women. Concession for conversion for SME good relief under capital gain tax.

Hemant M. Joshi (Chairman, Finance Committee & CEO Delloite)

Many good micro ideas for India and Bharat
Eg :  a.  rural focus
b.      IT usage enhancement
c.      Naval area focus
d.      Agriculture productivity improvement
e.      Skill development
However, at present there is about 85% of leakages in implementation.  Role of audit and control and monitoring of implementation of huge government spending will help in better utilization and controlling abuse.

M.A. Tejani (Hon. Secretary & president, GITS Foods- Products)

a.  Nothing on effective delivery mechanism
b.  Nothing on prison expansion and reform
It is mentioned that the number of Food Parks has increased; but none of the food parks, show a signal to start.   There is no mention for food processing industry. We have seen inflation despite stimulus. Overall budget is good.

Vikas Khare (Chairman, Central Excise-Service Tax Committee)

Increase in Excise duty by 2% is as expected ‘roll back’ of stimulus package.
Hike of Rs 1 per litre on petro products will further increase prices.
It is welcome step to allow 100% cenvat credit in one go for small scale industry.  It means that if small scale unit invest in capital goods Rs. 10 lacs, he will get duty set off Rs. 50,000/- and so on.
Increase in duty to Electric car will prove to the benefit of that industry as it will help to set off full input tax of excise and service tax. No clear cut indication when GST will be coming. Overall it is budget for inclusive growth, sustainable growth, fiscal consolidation and broadening tax base.

Aspi Kolah ( Chairman QPE committee & Director -Forbes Marshal)

Comparatively very welcome budget.  Banks in rural areas is a  positive move .  Now a day’s one man has to go 5/6 KM to deposit/withdraw the money in bank.  It is definitely come into a system control aspect.

CII Reactions

Dr Naushad Forbes, Chairman, Confederation of Indian Industries Western Region today said that the ‘Union Budget 2010-11 has met industry expectations. There has been moderate rolling back of fiscal stimulus measures. Government has focused on improving the fiscal deficit of the country. There are some concerns over the hike in Customs Duty on Oil & Oil products. Nevertheless, this is overall a balanced budget.’

Reacting after the presentation of budget by Union finance minister Pranab Mukherjee, Forbes expressed his opinion.

Meanwhile, Chandrajit Banerjee, Director General  CII said ina statement, « The Finance Minister’s fine balancing act is visible in the budget proposals where on the one hand he has clearly set the roadmap for fiscal consolidation by setting the targets for fiscal deficit reduction over the next three years, raising resources for capital expenditure by setting disinvestment targets and partially rolling back the excise duty stimulus and on the other hand, he has set the stage to address productivity issues in agriculture, putting more disposable income in the hand of aam aadmi, to ensure positive environment for growth. We welcome the Union Budget 2010-11. »


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