The budget of 2012-13 has brought a mixed bag of opinions from top industrialists in India Inc. Most of them feel that the budget is optimistic and they do not even mind the hike in corporate taxes and taxes for the rich. Industry leaders across sectors also feel that this is an expected budget with generous allocation towards Food Security Bill and social schemes. However, increase in excise duty has left the automotive sector disappointed.
Adi Godrej, chairman, Godrej Group, says “ The budget has given emphasis to areas like agriculture, technology and science. The incentives that the government has offered for investments into the capital markets are welcomed. This will divert investments from gold which has become high in the last couple of years. This step will improve investment into the productive areas of the economy.”
Godrej further added the goods and services tax (GST) will add to the GDP growth. Some of the expenditure in rural areas and agriculture development can indirectly spur consumption, he said.
According to Malvinder Mohan Singh, executive chairman, Fortis Healthcare Ltd overall it is a pragmatic budget.
“There is a strong focus on the social sector with a 30 per cent additional allocation, emphasising health and education. Outlay on rural development is up 46 per cent and infrastructure has been given a significant boost.”
Singh further added that the initiative for a women’s bank additional infusion of Rs 14,000 crs in PSU banks and greater flexibility for banks in retailing financial products, including micro insurance, are all laudable.
“In the final analysis, the budget does a good balancing act by containing the fiscal deficit to 4.8 per cent,” he says
Malcolm Monteiro, senior vice president & area director, South Asia, DHL Express said, “The decision to establish a panel to monitor the costs of doing business in India is really welcome. Logistics companies will hope that this would lead to bold initiatives to reduce transaction costs of trading across India’s international as well as state borders. The industry was also hoping announcements would be made to add clarity on the design and the roadmap for implementation of GST, but the same was not addressed”.
The budget does not have anything specific for the IT sector, but still some industry leaders are satisfied with it.
S. Gopalakrishnan, co chairman, Infosys Technologies, said, “As far as the IT sector is concerned, this budget will boost entrepreneurship and SMEs that come up in IT-ITES. Most of the incubators in our country are also technology-centric and budget will only give a boost to them. Incubators being included in the CSR activity is a very positive step. ”
Harsh Chitale, CEO, HCL Infosystems said allocation of sufficient funds for the food security bill and taxing the super rich was expected.
“As far as the IT sector is concerned, it is business as usual. There is nothing much that will impact the IT sector, thus I am not disappointed,” he said.
Having a slightly different view, Keshav Murugesh, CEO, WNS Global Services says, “The specific proposals which are positives for the industry are safe Harbour rules for IT/ITES companies to be announced by March 2013, which will help bring certainty on transfer pricing matters for the industry”.
The revised GAAR regulations will apply from April 2016 and this will remove the uncertainty on taxability of investments already brought into the country, according to him.
On the flip side, a few disappointments for the industry are an increase in corporate tax (by way of the increase in surcharge on tax from 5 per cent to 10 per cent) and no reduction in MAT rate on business carried out in SEZs.
Rana Kapoor, founder and CEO, YES BANK said the expected fiscal consolidation in 2013-14 has been laid out by a combination of expenditure switching and investment driven measures.
“On the revenue side, while the budget refrained from any major change in tax rates, the government expects to improve the Tax-to-GDP ratio by 50 bps to 10.9% in FY14, predicated on a revival in economic growth and widening of tax net,” Kapoor said.
Kapoor said the finance minister has strived to create “economic space” in a difficult environment, while adhering to fiscal prudence.
Ajay S Shriram, vice president, CII and chairman & senior MD, DSCL notes, “The budget says that people need jobs and that is the pulse of our economy. Even the funds given to social schemes is a desirable step and credit to farmers also gives a good direction. The core requirements of our economy like infrastructure too have been taken care of.”
On similar lines, Chandrajit Banerjee ,Director General of Confederation of Indian Industry (CII) concludes, “This is not a very big bang budget but solves critical issues like Infrastructure and fiscal deficit being in control. One sector that the government has focused on this time is the SME sector which shows the growth orientation in the budget. Even the mention of GST is a positive sentiment.”
The automotive sector is definitely not very content with the budget decisions. Budget 2013 has proposed an increase in import duties of completely built cars and motorcycles. It has also stated that import duty on completely built motorcycles above 800cc will be increased from 60 per cent to 75 per cent. Excise duty on all SUVs will be increased from 27 per cent to 30 per cent.
On a more holistic note, RC Bhargava, chairman, Maruti Suzuki Ltd (MSIL), said,” Overall it’s a good budget considering that the finance minister is keen to get investments in the country and encourage financial institutional investors. It is also a good sign that that the fiscal deficit has been kept down. However, it’s a collective effort of states and different ministries to work towards a growth of 6 to 7 per cent.”
P. Balendran, vice president, General Motors India, said the hike in excise duty and import duty was unexpected and they will have to pass it on to the customers.
“The budget for the sector is disappointing from my perspective and will gain only five out of ten points. However, the real impact will be seen only once the fine print of the budget is out,” he said.
(Edited by Prem Udayabhanu)