Increased allocation of plan expenditure on education, rural development, agriculture, infrastructure etc provides the much needed impetus to these sectors. From the pharmaceutical sector perspective, there are no major changes in the Budget 2013-14. Investment allowance of 15 per cent on new plant and machinery is a welcome step and is expected to increase investment in new projects while simultaneously providing tax benefit to industry.
However, the increase in surcharge rates on both income tax and dividend distribution tax shall increase the tax outgo. Directional guidance on GST and DTC also provides much awaited clarity. However, it would have been good for the industry if MAT relief was restored for SEZ units and Cenvat credit rules were liberalised further.
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Saumen Chakraborty,
Chief Financial Officer, Dr Reddy's Laboratories
Few initiatives for financial inclusion
The 2013-14 Budget contains few initiatives for promotion of universal financial inclusion. From the standpoint of the microfinance industry, a token contribution of an additional Rs 100 crore to the India Microfinance Equity Fund has been made. While the symbolism of this allocation is important, it provides practically no real benefit to the industry which serves over 22 million unbanked clients in over 500 districts spread across 27 states. The microfinance sector needs regulatory clarity and stability.
The issue of regulatory duality needs to be addressed urgently. And, we hope that the Microfinance Institutions (Development and Regulation) Bill announced by the FM in the last year's Budget speech will get passed in the next few months. The proposed all-women public sector bank, aimed at catering to SHGs and other women in rural areas is, in theory, a good step. But, the execution challenge is large. Hopefully, it will not end up like many other well –"intentioned government schemes, which fail to take-off.
Alok Prasad
CEO, Micro Finance Institutions Network (MFIN)
Current allocation not enough
While there has been 24 per cent increase in the Budget for health sector at Rs 37,330 crore, the overall percentage of GDP for health will not cross 2 per cent. The target should have been minimum 3 per cent of the public outlay. The current allocation can only suffice to manage primary healthcare. The increase should have been 200 per cent. A few years ago, the Union government imposed education cess of 3 per cent.
Similarly, 1 per cent cess for healthcare would have been a good methodology to bridge the gap between what is required and what is available in terms of number of beds, doctors and paramedics. However, with the overall spurring of the economy and increased coverage of insurance, one other expectation was that universal health coverage scheme would get a mention in terms of the focus that is required. Having said that, I must commend the finance minister for focusing on alternate medicine, geriatric care and nutrient-enriched foods. We were looking for a special scheme for healthcare and incentives for electronic health records, use of telemedicine. These did not come through.
Sangita Reddy
Executive Director –" Operations, Apollo Hospitals
Implementation will be the key
I strongly feel that the Budget presented by the Finance Minister is a realistic Budget. Given the economic and political circumstances, the Finance Minister has presented a pragmatic Budget with positive objectives for long-term growth. The Finance Minister has proposed some notable steps bringing cheer to the infrastructure segment. As stated in his speech, the 12th Plan projects an investment of $ 1 trillion in infrastructure and it envisages that the private sector will share 47 percent of the investment.
Additionally, Infrastructure Debt Funds (IDF) will be encouraged. These funds will raise resources and, through take-out finance, credit enhancement and other innovative means, provide long-term low-cost debt for infrastructure projects. The government's plans to establish two new major ports in West Bengal and Andhra Pradesh, which will add 100 million tonnes of capacity, will give a major impetus to the overall growth. It is very encouraging to know that the government has plans to devise a PPP policy framework, with Coal India Limited as one of the partners, in order to increase the production of coal for supply to power producers like us. This will help in fuelling the raw material- deprived Indian power sector.
Another significant move by the government has been towards creating a better road network with plans to award 3,000 km of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh in the first six months of 2013-14. It will be good to know the way the government intends to route the development –" EPC or BOT. The government must take measures to address the issue of land acquisition; R&R, time-bound project approvals, environmental clearances and financing etc. Overall, the announcements are positive, implementation will be the key.
GV Sanjay Reddy
Vice chairman, GVK Group
Encouraging for agriculture
Overall the Budget for agriculture is quite encouraging with various schemes like the National Food security mission/Eastern area green revolution getting carried forward with higher allocations. Moreover, the target of agricultural lending to Rs 7 lakh crore will be very encouraging for the farming sector. Indian agriculture has exhibited strong resilience to seasonal factors; despite deficient rainfall during 2012-13, agricultural and allied sector production is likely to see an increase of 1.8%.
With expectations of normal monsoon in 2013-14 we should see a further rise in production. This creates a good environment for enhanced demand of fertilisers. Revised estimates provide for additional subsidy payout of Rs 5,000 crore during FY13. This will, to some extent help fertiliser companies overcome liquidity crunch. However, this still leaves a huge gap of unpaid subsidy bills, which get carried over into 2013-14. These are estimated to be around Rs 20,000 crore, hence higher allocation for next year would have been better.
Kapil Mehna
Managing director, Coromondel International Limited
Impact on pharma neutral
The overall impact of this Budget on the pharmaceuticals industry is neutral. We haven't seen any changes announced in the excise or customs duties of formulations or bulk drugs. On average, the excise duty is 4 per cent higher on APIs (active pharmaceutical ingredients or bulk drugs) than on formulations. Since APIs attract higher excise duty compared with the formulations, this leads to accumulation of credit, which is a cost to companies.
We were hoping the Budget would provide a solution by way of a refund mechanism for the unutilised credit. In addition, India is an attractive cost-efficient destination for drug manufacturing and the government needs to provide an impetus to such activities in the form of tax and fiscal benefits. Currently, the only tax benefit available for R&D activities is in the form of weighted deduction for in-house R&D. The government could have helped the industry by expanding the tax benefit to all R&D expenses, including contracted R&D.
Krishna Prasad
Managing director, Granules India