Corporates Hail Budget's Focus on Fiscal Consolidation

Corporates Hail Budget's Focus on Fiscal Consolidation
India Inc broadly welcomed the absence of any harsh moves in the Budget presented by Finance Minister P Chidambaram today and termed it as "balanced" and "purposeful" but maintained a lot more could have been done.

"It's a sigh of relief. He could have been harsher on tax and the populist schemes would have been much more... My worry in an election year was that he will throw out lot more doles," M&M Non-Executive Director Arun Nanda said here.

TCS Chief Executive N Chandrasekaran welcomed the clarity on taxation, saying "rules regarding development centres and safe harbor rules are very welcome".

"The Budget has balanced near-term priorities and long term growth drivers," ICICI Bank Managing Director and Chief Executive Chanda Kochhar said and welcomed the commitment shown towards fiscal consolidation.

Calling the budget "very purposeful", Tata Chemicals MD R Mukundan said it has addressed all the necessary issues, including some on taxation like the GST.

Asked how an investor will look at the country after Chidambaram's comments on retrospective taxation, Mukundan said, "It is very important that he started with a commitment with an attempt to deliver on the ground and has spelt out what is the mechanism of delivery. At the end of the day, all of us have to legitimately pay the tax dues to government."

"The positive in the Budget is that no negatives have come in," Ramesh Chandak, Managing Director of EPC major KEC International, said.

He, however, gave a long list of unmet expectations like announcements or clarity on upping the electricity generation capacity, tackling transmission and distribution issues, land acquisition and the ironing out issues on the environment clearances front.

In what can come as a surprise, the industry captains were not upset over the proposal for extra surcharges for individuals and companies whose incomes are above a threshold.

"During periods of stress, some of the people who have greater means will have to pay more and that is a welcome step," Mukundan said.

Chidambaram's other moves which won appreciation from the industry include the move to get donations to incubators inside academic institutions under the corporate social responsibility spends.

Mastek Founder Ashank Desai said the support to the incubators and encouragement to angel investors will help the IT sector. He, however, sounded concerned that there were no announcements on e-governance or higher education aspects.

Aptech MD Ninad Karpe said the Budget is "high on intention but low on delivery", sounding sceptical of the repeated mentions on skills development and suggesting that meeting the target would be an uphill task.

Tata Capital Chief Financial Officer Govind Shankarnarayan welcomed the initiatives on financial sector, saying announcements like infra debt fund, factoring, SMEs indicate that a lot of attention has been paid to detail.

Industry body FICCI welcomed the investment and demand stimulating measures for manufacturing sector.

"We welcome the investment and demand stimulating measures in manufacturing, especially the investment allowance for two years, purchase of buses under Jawaharlal Nehru Urban Renewal Mission (JNNURM) and some positive action on industrial corridors," FICCI's Manufacturing and SME Committee Chairman Sanjay Bhatia said in a statement.

The Finance Minister has provided support to employment intensive sectors like textiles, leather and SME, he said, adding that such measures will ensure inclusive growth.

Vineet Nayyar, Chairman, Mahindra Satyam, said there is a sense of stability in taxation and a focus on bringing in initiatives to promote skill development.

"The Budget is balanced with a control on the deficit. I see that there is a sense of stability in taxation and a focus on bringing in initiatives to promote skill development and learning programs that facilitate employment in skilled role. Finance minister’s steps towards resolving bottlenecks in infrastructure and factors effecting economy is a welcome step," Nayyar said in a statement in Hyderabad.

Saumen Chakraborty, Chief Financial Officer, Dr Reddy's Laboratories, said though there is no major change for the pharmaceutical sector, under the current circumstances, the Budget is balanced and focuses on inclusive development.

Increased allocation of plan expenditure on education, rural development, agriculture, infrastructure etc provides the much needed impetus to these sectors, Chakraborty said.

According to Chakraborty, new initiatives in the areas of women welfare, self help groups and MSME would go a long way in promoting socio-economic development and restricting fiscal deficit to below 5 in next year would be crucial for the Indian economy.

CII Andhra Pradesh chapter described the Budget as "progressive" though it misses the industry body's suggestion to bring more people into tax net.

Suchitra Ella, Chairperson, CII AP said given the current economic conditions around the world the Budget will take the country forward.

"Keeping in mind the current economic situation both national and international level we at CII concluded that this is a progressive Budget and hopefully it will take the country forward in many of the areas that have been envisaged or focused on," Ella told reporters in Hyderabad.

Mohan Reddy disapproved the move to impose 10 per cent surcharge on persons (other than companies) whose taxable income exceeds Rs 1 crore.

"The disappointing issue is selectively some people were brought under extra tax net. We feel that it not good practice. We, from CII, right from the beginning are suggesting that more people should be brought in to tax gambit. More people should pay taxes," Reddy said.

Institute of Chartered Accountants of India (ICAI) President Subodh Kumar Agrawal said the Budget aims to accelerate growth through sustainable development and inclusive growth.

"The tax proposals are also in tandem with this overall aim of the budget, proposed to be achieved by focusing on key areas, such as bringing in stability in tax regime, ensuring a non-adversarial tax administration, curbing tax evasion and increasing voluntary compliance," he said in a statement.

According to him, significant thrust has been placed on non-adversarial tax administration.

"The proposal to provide for MRP based valuation in respect of branded medicaments of non-allopathy systems of medicine, will bring more clarity in law and reduce disputes.

However, non-rationalisation of the complex and restrictive credit provisions is a major disappointment," he noted.

Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the Budget proposals will help the industry to revive which has been affected due to economic slowdown.

Sharing similar views, Confederation of Indian textiles Industry (CITI) Chairman S V Arumugam said there have been signs of recovery in the industry and some of the positive features of the Budget would help this process further.

Restoring the optional excise regime for branded garments and made-ups is the most positive factor in this Budget, he said.

S Dinakaran Chairman of the Southern India Mills' Association (SIMA) too said that the government has addressed various issues related with the sector which would make the industry more attractive.

Allocation of Rs 2,400 crore for textile upgradation and continuation of TUF scheme and zero duty for cotton are major positives for the industry, Welspun Group chairman B K Goenka said.

Suryalakshmi Cotton Mills Managing Director Paritosh Agarwal said that pressure on garments pricing will now reduce and that will also boost the retail sector.

Giving investment allowance of 15 percent on investments of more than Rs 100 crore in plant and machinery will boost growth of the industry, Agarwal added.

"We welcome removal of the excise duty on branded garments which is expected to provide some form of protection to the domestic industry from cheap imports," Clothing Manufacturers Association Of India (CMAI) President Rahul Mehta said.
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