The BS jury gives its verdict - 7.5/10

India Inc has welcomed the initiatives on infrastructure spend and the thrust on rural development and employment generation. The tax reforms too have gone down well with corporates.

K BIRLA
Chairman, AV Birla group

The finance minister has presented an outstanding Budget. I see India climbing the IT services value chain and from the back office of the world, I see our country becoming the knowledge centre of the world given that the finance minister has announced seven million new IT jobs being created in the forseeable future.

I commend the plan to use forex resources for infrastructure development and the move to set up an SPV to channel funds into infrastructure.

The focus on employment and the proposal to generate 2.5 lakh additional jobs in food processing, 1.2 crore jobs in textiles, 7 million jobs in IT and several lakh jobs in construction, is laudable.

K V KAMATH
MD & CEO, ICICI Bank

The Budget underscores the importance of an efficient, world-class financial sector as an enabler and takes several important steps for wider availability of financial services, development of debt markets and a banking system aligned with global practices.

By encouraging delivery of financial services through agents and banking correspondents, the Budget makes it possible for banks to meet the challenge of sustainable, efficient, low-cost intermediation.

The removal of statutory floor rates for SLR and CRR will help to enhance credit flow and reduce the cost of credit. The amendment to the Banking Regulation Act is also important in the context of the move towards the new Basel framework.

NIMESH KAMPANI
CMD, JM Morgan

The winning points of the Budget are the reduction in the corporate tax rate, the stress on infrastructure, the efforts made towards the development of the corporate bond market, the implementation of value-added tax, banking sector consolidation moves and reforms, and the Income Tax Act amendment that says trading in derivatives will not be treated as speculative transaction.

The securities transaction tax (STT) hike has been a marginal, although STT on mutual fund unit transactions is unwarranted as it would tantamount to double taxation.

There has been disappointment that the benefit of the capital gains tax reduction has not been extended to other forms of transactions.

HEMENDRA KOTHARI
Chairman, DSP Merrill

Infrastructure investment, domestic consumption and capital expenditure by corporates look set to maintain their growth momentum and the increasing importance of rural investment will provide a thrust to the telecom, roads, ports and airports sectors.

Domestic consumption should receive a boost as slabs are raised on personal tax, thereby effectively reducing the tax rate for lower income levels. We believe domestic consumption will double over the next 5 years to $500 billion.

The positive surprise is the reduction in corporate tax, which apart from boosting the overall earnings growth by around 3 per cent in FY05-06, should also enhance the corporate capital expenditure cycle.

For the markets the positive news was that there was nothing negative. Funds waiting to enter the markets now have the confidence to do so.

Overall, we continue to expect GDP growth of 7.6 per cent for FY06 although on the negative side the forecast for the fiscal deficit of 4.3 per cent looks a difficult target.

A M NAIK CMD, Larsen & Toubro

A positive impetus for investment is the fiscal deficit to GDP ratio at 4.5 per cent and the revenue deficit at 2.7 per cent in the revised estimates for 2004-05. The Budget clearly focuses on infrastructure.

Together with MAT credit, the reduction of corporate tax to 30 per cent will promote growth. The focus on infrastructure and reduction in customs duties will improve the competitiveness of the industry.

Additionally, the commitment to correct the inverted duty structure and the intention to apply countervailing duty on all zero per cent countervailing duty imports will remove an anomaly. The abolition of price purchase preference to PSUs should have been included to improve industries competitiveness.

B MUTHURAMAN
MD, Tata Steel

It is a good Budget with a long-range focus that could stimulate demand as well as investment. We are happy to see that the focus is on development of rural infrastructure.

The creation of a special purpose vehicle for funding infrastructure like roads, ports and airports should help in mobilising resources for building infrastructure.

The reduction of peak rate of customs duty from 20 per cent to 15 per cent will help bring down the cost of new projects and will help the steel industry which is in the process of modernising and creating new capacities.

The reduction of duties on inputs and consumables such as refractory and coking coal will bring down costs.

It is unfortunate that excise duty on steel has gone up as this will impact the small consumers.

SUNIL BHARTI MITTAL
CMD, Bharti Enterprises

This is a well thought out Budget with an eye on infrastructure development and employment generation. It attempts to simplify tax laws, open up the economy further and includes steps for rural upliftment and for boosting education.

Creation of rural electricity distribution network and schemes for improving agricultural marketing infrastructure, are steps in the right direction. The lower customs duty on refrigerated vans will promote food processing, and give a fillip to the agricultural sector.

The commitment to 'Bharat Nirman', a comprehensive project of improving connectivity, phone links, electrification and irrigation, would make the life of an ordinary Indian a lot better.

S RAMADORAI
CEO & MD, TCS

There are enough measures in the Budget to ensure that the economy sustains its high-growth trajectory. Bottlenecks such as infrastructure have been addressed.

Such initiatives are important from the perspective of a high-growth industry like information technology. The industry will also need the government's help to increase the number of engineers and programmers graduating annually to make sure that its supply chain of skills remains healthy.

The move to create best-of-class institutions by transforming my alma mater, the Indian Institute of Science in Bangalore, into an academic institute on a par with the world's best universities is a personal reason to rejoice.

KISHORE BIYANI
MD, Pantaloon Retail

The rise in disposable income and the focus on infrastructure will lead to better a business environment and increased consumption. The reduction in import and excise duties will prove to be beneficial.

Although we appreciate the Budget's focus on education, health, agriculture and overall rural empowerment, the emerging Indian consumer might have been neglected in the budget.

On purely conceptual grounds we feel positive about the introduction of VAT, as it will do away with sales tax and other cumbersome legacies, but unless VAT is converted into a universal GST, that unifies all the states, as an internally borderless India, it's implementation may be difficult.

ANAND MAHINDRA
Vice-chairman & MD, M & M

The good thing about the Budget is that the finance minister hasn't done anything to break the momentum of the reforms process. Bharat Nirman is the big idea on which the Budget is based and, therefore, it has emphasised the right drivers of growth.

The thrust on agriculture should lead to rural affluence. Infrastructure development will lead to more employment, greater social development and will also create a channel for the delivery of goods and services to the newly empowered consumers. Lowering of taxes for corporates sounds like good news.

Unfortunately, the simultaneous lowering of the depreciation rate results in one hand taking away what the other hand gives.