Following are some of the reactions on the budget presented in the parliament on 26th Feb 2010
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Comments of Heidelberg Cement Managing Director Ashish Guha |
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Kautilya's inclusive budget. At the outset, congratulations to Finance Minister for having had a balanced approach towards all major issues and being sensitive to the needs of all. This budget has addressed all critical issues including GST and DTC. In his efforts to balance growth and inflation, he has kept a close vigil on fiscal deficit. Apart from increase in MAT from 15% to 18%, there have been no negative surprises. The stress on rural development will also augment growth of the country. Execution now will be the key success factor. |
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Mr. Narayan SA, Managing Director, Kotak Securities Ltd. |
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The Union Budget was announced on the back of low expectations. The three factors on which clarity was being sought from the Union Budget included level of government borrowings for FY11, targeted fiscal deficit and extent of rollback in stimulus. The Union Budget clearly outlined a road map for reduction in targeted fiscal deficit over the next few years. The government-borrowing target of Rs3.45 lac crore meets expectations. A measured rollback in stimulus and taxes as compared to expectations has been sentimentally positive. Clarity on timeline of implementation of Direct Tax Code and Goods and Service Tax has been helpful. Lowering of personal tax is a message to retain more in the hands of the public for consumption and savings. To summarize, the budget focuses on growth, inclusiveness and fiscal prudence. |
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Mr.Hemant Kanoria, Chairman & Managing Director, Srei Infrastructure Finance Ltd. |
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This year's budget has been a well balanced act with adequate emphasis on the infrastructure sector, awareness on containment of fiscal deficit, implementation roadmap for Goods & Services Tax (GST) and Direct Tax Code (DTC), rationalisation of income tax slabs, impetus to use of renewable energy According to him, the increased allocations for the various infrastructure sectors and the emphasis on developing social infrastructure are all positive developments. The idea of expanding the social security net and the urgent need to address the skill-gap augur well for the economy. For the infrastructure financing sector, the increase in MAT from 15% to 18% would however act as a deterrent. We were expecting re-instatement of the benefits under Section 10-23(G) of Income Tax Act, which did not happen, he added. |
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Mr. Gaurav Dua - Head Research, Sharekhan Ltd |
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Finance Minister has addressed the key issues of containing fiscal slippage and outlined a clear roadmap for the next three years. The net government borrowing program for 2010-11 is also well under control and allays fears of crowding out of bank credit for private sector. Tax proposals related to corporate and capital markets were benign and in line with expectation with no negative surprises. The thrust t on reforms and announcement like banking licenses for private sector non-banking companies were unexpected positive moves. |
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Anuj Puri, Chairman & Country head, Jones Lang LaSalle Meghraj: |
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This is a positive, growth-oriented budget - and growth in the economy always equals growth for the real estate sector. There was definitely good news for agriculture, education, banking, hospitality and infrastructure. Because of the overall economic growth implied in their enablement by this budget, we have no overt complaints on behalf of real estate. |
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Pradeep Jain, Chairman, Parsvnath Developers Limited |
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Hon'ble finance minister's further support to the real estate sector to continue to get the benefit under 80IB(10) on the ongoing affordable housing projects which were earlier required to be completed in 4 years from the date of sanction are now allowed to be completed in five years. This indeed is a direct support to the sector as during the slowdown some projects did get delay but now the developers will continue to get the tax benefit in affordable housing projects under section 80 IB (10). Partial roll back of excise duty on cement and cement products is a welcome move as it will help in reducing the input cost thereby making the final product economical, |
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Sanjay Grover, Partner (Oil & Gas), Ernst & Young mentioned, |
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Earlier, the fees paid for technical services were taxable in India only if the services were both rendered and utilised in India. However, the budget proposes to tax these fees if paid by a resident Indian, irrespective of whether rendered or utilised in India. Similarly, foreign upstream services providers having establishment in India were earlier taxed assuming 10% of their net receipts as profits. However, the present budget has removed this benefit for fees received by a foreign company from an Indian company in the nature of fees for technical services or royalties. Both these developments could have a major negative impact on the petroleum exploration industry and may lead to increased litigation. |
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Mr.Rajesh Agarwal-MD, Insecticide (India) Ltd. |
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The delay in introduction of GST is a matter of concern as it has been delayed by another year. It is little early to increase the excise duty from 8 % to 10 %. The economy had just started showing the positive signs of growth. One more year should have been provided to Industry. In 3 years MAT is increased from 10 to 18 %. The exemption zones were created to motivate the industry to move towards underdeveloped areas. This increase of 3 % again this year is a straight blow in the belly. No consideration is given to crop protection industry, without which we cannot feed the country. |
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Kaushal Sampat, (Chief Operating Officer, Dun & Bradstreet India) |
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At a time when the Indian economy is firmly on the revival path, what was required from the Budget was a further push for consumption and investment. The Budget announcements have done just that. The continued thrust on agriculture, infrastructure and rural development will unlock much of the economic growth potential in the medium-term. Although the excise duty rates have been hiked, they still remain at the pre-crisis level and should not be a deterrent in the process of economic recovery. Along with maintaining the focus on broad based growth, the budget has also addressed concerns on the fiscal deficit front. While there were no major big bang announcements in this budget, the overall tone is certainly pro-reformist. The Budget has emphasized on the Government's intent towards moving forward on the reform agenda. Overall, it is a positive budget and we would assign a rating of 8 on 10. |
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Mr. Anand James, Geojit Comtrade: |
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Rise in Petrol/Diesel's excise duty could be seen as a right step in the direction of reducing deficits. The budget deficit for FY12 & FY13 are expected to come down to 4.8% and 4.1% respectively, as against 5.5% estimated in FY11. To this extent it is inevitable the government reduces its subsidy burden and augurs well for economic stability in the long run. Oil prices have already climbed back to $80/bbl levels spurred by demand from global economies recovering from the financial turmoil. Thus, both international prices as well as Government's tagets for defcit, point to higher fuel prices in In the very short run, yes, the hike should maintain prices food as well as non food items on the higher side and inflation would remain on the scanner. The hike in customs duty in Gold by Rs.100/10g and in Silver by Rs. 500/kg has come at a time when the Jewellery sector is reeling under the pressure of waning demand in the wake of high International Gold prices. Silver and Gold futures in MCX reacted immediately by rising 1.4% and 0.4% immediately. While this does not augur well for the overall Jewellery industry, consumption demand may not taper sharply as prices are still 8-10% below the record peak seen in late December 2009. Bombay Bullion Association's provisional data had shown a rise in imports to 30-35 tonnes in February wrt 7-8 tonnes last February, indicating that demand may have picked following the recent fall. Expanding the second slab of income tax to 1.6-5 lakhs, should put more dispensable income in the middle income group, and augurs well for the commodities. The hike in excise duty was widlely anticipated, and could be taken in this light. Natural Rubber futures prices in NMCE rose following budget announcements, as traders took a positive stance after weighing the impact of higher vechicle prices and tyre demand. A section of traders had reckoned a reduction in NR's customs duty, but the move was less expected as International prices continue to remain high. Though the deadline implementation of GST is now pushed to April 2011, it augurs well not to have rushed, as it would beat the entire point of simplification. However, clarity is sought regarding the ways in which the innumerable taxation procedures are unified and agreement being brought between the Central and State taxations. Subsidiy on maintenance of sugar's buffer stocks would be 2 billion rupeees, but it is disappointing the sugar futures trading remains suspended denying proper price discovery and a hedging mechanism for traders consumers and producers alike. Overall the budget is forward looking for economic growth and for commodities. |
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Prateek Agrawal, Head - Equities, Bharti AXA Investment Managers |
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The budgetary maths has been more or less in line with the short note that we circulated earlier. However, the budget did manage to surprise with some cuts in the personal taxation. Most of the revenue is being sought to be raised through increase in excise duties and duties on crude and petro products. The budget has positive measures such as bringing the subsidies into the main budget as opposed to the practice of issuance of oil bonds. While the move to raise revenues through indirect taxes would be seen as being inflationary, we believe that given the expected number on net government borrowings, the bond market would not react negatively. Clearly a low interest rate environment (in terms of lending rates) is conducive for the growth of infrastructure sector in India. Measures like Infrastructure tax free bonds would also channel savings into this space and take care of the asset liability mismatch to some extent. |
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Mr R. Ramaseshan, MD and CEO, NCDEX Limited on the Budget |
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The Union Budget presented for 2010-11 is a pragmatic one as it attempts to address some pressing issues of the economy within the strict contours of managing the fiscal deficit. The expenditure outlays are well targeted especially at agriculture and related activities. The approach to agriculture is two-fold: improving output though higher doses of outlays on water management and productivity and strengthening of the logistics relating to this sector. Recognizing the high level of wastage in the farm sector, the Budget focuses quite strongly on creating an environment for higher investment in the warehousing space, with emphasis on cold storage, where there are limited facilities today. It is hoped that these measures would be sustained in the next few years, as agriculture requires continuous attention to become robust and resilient to weather conditions. The Budget is also focused on being 'inclusive' with considerable allocations towards social upliftment, with the NREGS being the fulcrum. The Commodity Markets would welcome the focus on warehousing as this is one area which is critical for its operations. Ideally we would have liked positive views on the amendment of the FCRA and the Warehousing Act to have been made; but are hopeful that they would be discussed and passed during the course of the year. |
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Mr. Rugved Dhumale, AVP, Risk Management Solutions, Mecklai Financial. |
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The Budget has managed to strike a balance between growth and fiscal discipline. The direct tax reductions will stimulate demand driven growth, while the indirect tax increases will enhance tax receipts and help meet the deficit target of 5.5%. The planned reduction in the deficit and the resultant borrowing program, along with the disinvestment plan will mean that the upward pressure on domestic interest rates will reduce and the rupee will retain its appreciating bias. The budget is primarily positive for the currency and stock markets, given its thrust on fiscal reforms in the areas of subsidy, direct and indirect taxes. Barring global shocks, FII & FDI inflows are likely to remain strong in this year. The budget announcements are positive for sectors such as fertilizer, petroleum and banking and will give a boost to these industries. How the government delivers on its promises of reigning in fiscal discipline and reforming the tax structure remains to be seen. |
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Mr. Girish Rao, CEO& Managing Director of NOVA Medical Centers |
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The Union Budget 2010 looks very promising especially with respect to the Health Sector. We are especially glad about the increase in fund allocation for the Health Sector to Rs.22,300 crore from Rs.19,534crore. Also, the Finance minister's decision to improve the food security and healthcare systems in the country is highly commendable. In total the Union budget 2010 is a progressive and people-friendly budget. |
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Mr. Aditya V. Agarwal, Director, Emami Group |
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From the FMCG's point of view the Budget has been good though there are some grey areas. The increase in excise duty will increase the input costs and measures like hiking the MAT will also impact the bottom-line. For edible oil manufacturers, the budget belied some expectations. We were hopeful that the government will take some steps to curb import of finished edible oil so that the domestic players are protected and import dependability decreases. There is also no mention about encouraging corporate farming. As mentioned earlier, the hike in excise will also increase the input costs like packaging materials, raw materials like chemicals etc. Imposing additional duty of Rs 50 per tonne on coal will also increase the cost of electricity. While the impact of increase in duty on crude petroleum and petro products are yet to be ascertained, however, if the oil refining companies pass it on the consumers, then the prices of FMCG items might increase. Though the Finance Minister has taken environment friendly steps by setting up energy funds, however, he has remained silent on bio-diesel. The bio-diesel industry had great expectations from the budget. |
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Mr. Dalip Sehgal, Managing Director, Godrej Consumer Products Ltd. |
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In my view, overall it is a good budget. The increase in income tax slabs and additional expenditure in rural India will create consumer demand resulting in economic growth. While on the other hand, there are certain drawbacks from the industry point of view. For instance, the 2% hike in excise duty and increase in MAT from 15-18%, will lead to price increase as input prices will go up and could fuel inflation to some extent. The hike in diesel and petrol prices will have a cascading effect. In addition, implementation of GST which has been deferred to 2011 was disappointing for the FMCG sector. To sum it up, it is a sound budget from the economic point of view. |
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Ashu Suyash, Managing Director and Country Head - India, Fidelity International |
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The rationalisation of personal income tax slabs is a significant announcement in the Budget and is in keeping with the proposals of the Direct Tax Code. With additional disposable income in the hands of individuals, consumption will get a boost which is essential to maintain growth. Equally, there is room for part of this to go in to savings and as a player in this space we are reasonably excited at the opportunity it presents. While the Budget provides for a Rs. 20,000 deduction over and above the Section 80C limit of one lakh rupees for investment in to infrastructure bonds, a hike in the Section 80C limit itself for market-linked instruments would have been welcome. Alternately, infrastructure-oriented mutual funds could have been included to get a share of the savings and it is disappointing that they weren't. |
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Mr. Seemanto Roy, Head, Aamby Valley City and Sahara Entertainment Business |
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The emphasis on solar energy and setting up of the National Clean Energy Fund is also well timed and will make India a key player in supporting the cause of curbing Global Warming. His proposal to corporate surcharge from 10% to 7.5% and also the lowering of tax slabs on personal incomes will create a surge of demand and competitiveness in the market. The creation of a unique symbol for the Indian Rupee like the US Dollar and the British Pound will give an enhanced and unique identity to our national currency. |
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Mr. Chandrajit Banerjee, Director General, CII |
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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, said |
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Mr. Avinash Narvekar, Tax Partner-Real Estate, Ernst &Young |
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Service-tax could significantly increase the transaction cost for specified asset classes. For developers, there may also be a trade-off between the realizing pre-sales, and reducing transaction costs, as service-tax would now be levied on sale of property, unless the entire consideration is paid after completion of construction. Liberalizing the limit of commercial space that could be created in such projects will also help. On the flip side however, companies executing such projects would now need to pay a higher minimum alternate tax of 19.93%. |
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Mr. Vidur Bharadwaj, Director, The 3C Company |
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We welcome the Union Budget for the year which has made a small beginning towards providing sops for the benefit of conserving energy and lead to efficient usage of construction material. The Government's move towards cutting the excise duties for CFLs by 50% will provide an impetus to the usage of energy saving lighting fixtures and help spreading awareness for energy efficient materials. New direct tax rates slabs would offer higher dispensable income for individuals. One can expect greater levels of such surplus money to come to the real estate segment as investments. This will indeed give a boost to the sector. We however expected the Government go a step forward and announce a subsidy package and tax relief for development of green buildings. This would have gone a long way in increasing green development in the country. Providing industry status to real estate in this budget would have further facilitated easy availability of capital for developers as real estate sector is still not preferred for investment by the financial institutions. |
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Mr. Anil Chanana, CFO, HCL Technologies |
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The budget has been successful in reigning in the fiscal deficit while at the same time focusing on inclusive growth. With the enhanced spending on infrastructure, this budget would help stimulate domestic demand for IT products and services. It also increases the disposable income in the hands of the employees which is beneficial to the IT Industry in view of its high human capital intensity. |
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Ms. Shobana Kamineni, Wholetime Director, Apollo Munich Health Insurance |
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I think this budget is good for the domestic economy. The government seems to be doing its bit towards economic recovery. The decision to broaden the tax exemption limits and to provide increased level of tax exemption under section 80C is a welcome and would provide fresh impetus with enhanced disposable income. Furthermore, the decision to reduce the CVD by 5% on medical equipments is a very positive step taken by the government to bring down healthcare costs. As for the insurance sector, Health insurance has been acknowledged as one of the most efficient means to meet and manage spends on healthcare. We were looking forward to an increase in the tax exemption limit on Health Insurance to address the rising cost of medical treatment in India. |
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