 "India Inc disenchanted with Budget")
Chief executive officers (CEOs) said the many tax and subsidy reduction targets set by Finance Minister
P Chidambaram looked too ambitious. The full Budget to be presented after the elections would be the real test of the new government's willingness and ability to deliver on fiscal consolidation.
“What is needed now is quick and effective implementation of reforms that are long-pending, among these the GST and DTC. Any action taken to tackle the reforms backlog will boost business sentiment, re-ignite the investment cycle, and propel the economy into a higher growth trajectory,” said Kumar Mangalam Birla, chairman of the Aditya Birla Group.
India Inc has had a diffucult time in the past three years, with a slowing economy, investigations filed against corporate leaders and the environment ministry refusing to clear investment proposals worth thousands of crores. Though new Environment Minister Veerappa Moily has cleared projects worth Rs 2.5 lakh crore since December, CEOs say the damage has been done.
Most companies have postponed plans for expansion or new projects, waiting for the new government to detail its economic policy. A political tussle between the Congress party and others ensured many tax reform proposals, such as GST or DTC, did not proceed. “The biggest problem facing Indian companies today is uncertainty,” said Hindalco Managing Director (MD) Debu Bhattacharya.
R Shankar Raman, chief finance officer at construction major Larsen and Toubro, said: “Achieving the (Budget’s) targeted revenue growth in a sluggish economy will be a challenge in 2014-15. Measures to boost the health of the manufacturing sector in general and capital goods in particular would require sustained initiatives over the next several years.”
Govind Shrikhande, MD of retail firm Shoppers Stop, said the “political Budget” clearly aimed to appease the common man, stressed industries and the ruffled economy. The clear beneficiaries are the manufacturing and automobile industries, which have received significant respite in excise duty. The reduction in excise duty from 12 per cent to 10 per cent on capital and consumer goods will be a great relief to manufacturers and retailers, helping growth of these sectors, he said.
T V Narendran, MD (India and Southeast Asia), Tata Steel, said relief to the struggling manufacturing sector augurs well for steel makers. But, he said, it needs to be noted the sector’s problems are more structural in nature.
“While the finance minister has highlighted the role played by the Cabinet Committee on Investment in clearing stuck projects, there is an urgent need for a comprehensive review of the entire mechanism for clearances (such as environmental and forest clearances) to industrial projects. To revive industrial growth, the government needs to implement a time-bound, simple mechanism that is fair to all stakeholders and encourages economic activity.”
Harsh Goenka, chairman, RPG Enterprises, said: “The Budget seems balanced and practical. There has been minor tinkering with the taxation structure; largely steps in the right direction that need to be supported by larger policy decisions to bolster investment and improve sentiment, both internally and globally.”
Firdose Vandrevala, executive vice-chairman, Essar Steel, said something was better than nothing. “The proposal to reduce excise duty on automobiles in the current economic environment is a welcome step, though it would have been more meaningful and impactful if the excise duty on steel would have been reduced. This would have had a positive and deeper influence on a wider section of Indian industry,” he said.