‘POSITIVE’
A Vellayan
Executive Chairman, Murugappa Group
Long-term initiatives like increased allocation for rural infrastructure towards easing production and distribution bottlenecks and inclusion of capital investment in fertilizer production as an infrastructure sub-sector will impact the sector positively. There appears to be a gross underestimation of the fertilizer subsidy required for the year 2011-12. Even without much growth in consumption, at current world prices, it is estimated that the overall fertilizer subsidy allocation needs to be around Rs 80,000 crore, which is Rs 30,000 crore more than what has been earmarked. The overall budget looks very positive from the macroeconomic point of view in general and agricultural and infrastructure sectors in particular. The agriculture sector has received a great fillip in Budget 2011.
R Seshasayee
MD, Ashok Leyland
The auto sector will be happy that there is no hike in excise duty rates and the increased accent on infrastructure will augur well going forward. The reduction in subsidy amounts would mean a fairly significant initiative being taken to move from the current paradigm to perhaps a new paradigm, in terms of cash transfers but represents a seriously daunting task. The whole revenue calculations are predicated on the assumption that the economy is going to grow at 9% along with a fairly high growth rate for the manufacturing sector. Many of the growth dampeners like the monetary policy that is likely to get tightened further, rising commodity prices, skill shortages, inadequate supporting infrastructure and the like still remain.
R L Ravichandran
Executive director, Eicher Motors
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Continuing existing duty structure is a good point for automobile sector. The segments which are keenly looking for improvement are micro transports, medium and heavy commercial vehicles. For them, any infrastructure development like fresh investment on infrastructure and focus on agriculture would help. We have to wait and see what the impact of these decisions would be. The support provided for hybrid vehicles is a new development. We would have been happier if there is a reduction of duty structure for aluminium and steel, which are creating problems in the industry now.
Ajay Bimbhet
MD, Royal Sundaram Alliance Insurance Co Ltd
It is heartening to note that the Insurance Amendment Bill is a priority for the government. The introduction of the Bill will bring in more reforms to the industry. Further, the fillip given to the development of housing sector / infrastructure will help to boost the business of insurance companies in these industries. Also, the increase in health budget and extension of RSBY health scheme to cover unorganised sector of marginalised workers and others will enhance customer base, creating a greater opportunity for the insurers. Overall, the budget seems to be progressive.
Raghavendra Rao
MD, Orchid Chemicals and Pharmaceuticals Ltd
On a macro level, the 4.8 per cent fiscal deficit and 4.3 per cent revenue deficit budget is encouraging. The healthcare allocation seeing an increase of 20 per cent is a good sign. Including diagnostics and treatment in the services sector is also a good move. Thrust given for conservation of environment is a welcome move, and there is also mention of a green chemistry on enzymes. Though education has also given prominence, there is hardly any mentioning of science education as such, which would have been added for the benefit of the research happening in the country.
S Chandramohan
CFO, TAFE
Significant thrust has been given to agriculture segment in this budget. The credit availability in agriculture has been enhanced from Rs 3,75,000 crore to Rs 4,25,000 crore, which is roughly around 27 per cent. Continuation of existing interest subvention scheme on short-term farm loans at 7 per cent interest and the infrastructure initiatives in fertilisers is also a welcome move. The FII limit increased from $5 billion to $25 billion for infrastructure investment with a maturity of five years minimum, is also positive. The point of concern is though there was a mention of nutrient-based fertiliser subsidy in 2009 and 2010, it has not been effective.
E Balaji
MD & CEO, Ma Foi Randstad
The allocation of Rs 500 crore for National Skill Development Fund to promote vocational skill building is a welcome move. About 12 million people enter the labour market every year, out of which only 5% possess a training certification. The National Skill Development programme will have to ensure that the new entrants are gainfully employed by making it easy for them to acquire vocational skills at affordable cost. Similarly, if the Indian industries have to move up the value chain, the public expenditure into innovation and R&D should be increased. In this context, it is heartening to note the Finance Minister announced the government’s intention to set up Innovation Councils and linking 1500 institutes with National Knowledge Network by next year. These measures should produce more research skill.
M Narendra
CMD, Indian Overseas Bank
The budget for 2011-12 has paved the way for a strong, sustained and inclusive economic growth starting FY12. The budget allocations and proposals are well rounded to ensure a balanced growth of all sectors. Specific and time bound measures have been announced to tackle the persistent inflationary pressures, particularly of food items.
The prospect of a strong banking-led growth underlies the macro projections outlined in the budget, it has not only provided for suitably capitalizing the public sector banks to support the anticipated credit expansion. It has also made way for inducting new private players to augment the banking system. Resumption of financial sector reforms has also been announced for strengthening the banks as global players.
Anand Sundaresan
MD, Schwing Stetter India
The infrastructure policy and the public private partnership model are positive signs for the industry. Special funding for metro rail projects, the continuing excise duty structure and unification of export duty rates on iron ore at 20 per cent are also supposed to benefit the industry. Overall, for a construction equipment industry player, we are seeing a good 2011 ahead.
Ford India spokesperson
In line with last year’s commitment, FM’s proposal to present the GST bill this year is a welcome move as this will result in correction of rates and better compliance. More importantly, the Union budget aims to sustain economic growth and strengthen infrastructure through inclusive development.
The growth and recognition of the automotive sector as highlighted by FM in his speech was gratifying, thereby, underlining the importance of the sector. The government’s support towards environment friendly technologies with the launch of National Mission for Hybrid and Electric Vehicles is, indeed, visionary. This along with the renewed focus on infrastructure and development of rural economy will pave the way for the next stage of growth for the sector.
P Kishore
MD, Everonn Education
Increase in allocation for education sector by 24 percent to Rs 52,057 crore is a good news and that of Sarva Siksha Abhiyan by 40 percent at Rs 2,100 crore will give the much needed boost to the education sector. We also welcome the government’s initiative to revamp the centrally sponsored scheme for Vocationalisation of Secondary Education to improve the employability of our youth. An additional allocation of Rs 500 crore to the National Skill Development Fund.
That the National Knowledge Network (NKN) will link 1,500 institutes of higher learning and research through an optical fibre backbone by 2012 shows the governments’ inclination to reach quality education to the students irrespective of their geographies.
GRK Reddy
CMD, Marg group
The proposals with regard to infrastructure are quite pro-industry. The allowance of tax free bond of Rs 30,000 crore to be used by various government undertakings in the year 2011-12 to give a boost to infrastructure development in railways, ports, housing and highways development, is a welcome move. The stimulus package for the affordable housing sector is most welcome. The investment linked weighted deduction, liberalization of interest subvention of 1% and creation of mortgage risk guarantee fund to enhance credit worthiness of EWS &LIG households, will together provide a surge in affordable housing demand.
‘DISAPPOINTING’
Prathap C Reddy
Chairman, Apollo Hospitals
Yet again, initiatives to reform the healthcare agenda have gone unanswered in the Union Budget. Though the budget had a significant allocation for infrastructure, not finding healthcare on the agenda of the Finance Minister takes another year away in bridging the affordability and accessibility gap in our country. Personally, I was hopeful that the Union Budget would accord the National Priority Sector status to Healthcare, which would have been the perfect motivator to attract funding, create gainful employment for millions and act like an energy enzyme for the GDP. I would urge our leaders to explore the potential of stimulating healthcare to meet the infrastructure gap, provide gainful employment and build a healthier GDP.
R Chandrasekaran
President and MD (Global Delivery), Cognizant
The levy of Minimum Alternate Tax on units operating in the Special Economic Zones in what the Budget calls the need "to ensure equal sharing of corporate tax liability" appears to be a disappointing move. Further, it would also serve as a significant disincentive for small- and medium-sized companies seeking the benefits of SEZs. On the positive side, the Budget has articulated the growing significance of technology implementation as a means to better governance and innovation as an instrument of differentiation and competitiveness, underscoring the fact that they are no longer matters of choice, but imperatives of changing times.
A Sakthivel
President, Tirupur Exporters' Association
Disappointed with non-mentioning of the fixing of the export credit in Indian rupee at the base rate itself which was requested in the pre-budget memorandum. Interest subvention at 2 per cent has not been extended for one more year for all products in knitwear garment sector. As such there is no big announcement for the export sectors which is mainly required to face the stiff competition in the global market.
The proposal to convert the optional scheme for payment of excise duty on readymade garments and textile madeups into a compulsory mandatory excise duty at a unified rate of 10 per cent without Cenvat credit facility would be applicable only to branded garments or madeups for domestic sales, and exporting units should not be compelled to register with central excise department.
The announcement of fund to the tune of Rs 3,000 crore to Nabard for financially viable 15,000 handlooms cooperative societies and 300,000 handloom weavers is welcome.
‘NOT ENOUGH’
Arun Jain
Chairman and CEO, Polaris Software Lab Ltd
There was no mention of the IT industry in the budget, though the industry is worth $ 60 billion. But we have picked up some words like IT and governance, where the IT is seen as a backbone for governance, for manufacturing, agriculture and the distribution part of it. I think the thinking of the government is moving towards governance with technology as a backbone there is an opportunity of public private partnership, though there was no mentioning of PPP model in this in the budget. Our demand for extension of STPI has not been addressed. The STPI should have extended at least to next three years, for the growth of the industry. The industry has to remain as a global centre. They are thinking of it as a system for simplification and distribution connecting the rural segment with Indian economy. That is the point I found interesting.
Rajamannar Ramaswamy
Group MD, Inno Group
While we welcome the raising of housing loan limit for priority sector lending to Rs 25 lakh and the move to further liberalise FDI policy, overall the Budget has fallen short of expectations in the real estate sector. Not according industry status to real estate was a disappointment. This would have made banking finance easier and cheaper for real estate companies and would have given the much needed impetus to the housing sector. Rising inflation, tight money market conditions and very high lending rates are concerns looming large over the economy in general.
K K Raman
Executive director, DLF Housing
For housing segment, I don't think the approach in the budget is enough. The affordable housing, which consists majority of the housing requirements in India, has not been addressed properly in the budget, except the liberalisation of the existing scheme of one per cent interest subvention on housing loans up to Rs 15 lakh, where the cost of house does not exceed Rs 25 lakh. The move for mortgage risk guarantee fund is also another significant move, but overall, we have to wait and see what this offers to the increasing shortage of houses.