Realistic but not reformist: BS Jury

India Inc believes that the Union Budget has good intentions but isn?t forward-looking enough

In an extremely challenging year, the FM has presented a pragmatic Budget. To bolster the economy, he has given a big push to infrastructure, agriculture and industry as well. Incentives on R&D spends and accelerated depreciation are positives for industrial growth. The doubling of the infrastructure bonds is indeed a bold step, as is the move to take financial services to the doorstep of the farmer.

The infusion of substantial funds for capitalisation of RRBs and Nabard will help small and marginal farmers and facilitate the growth. The emphasis on resource mobilisation sends the right signal. The GDP growth forecast at 7.6 per cent seems achievable. It augurs well that the sharp focus on inclusive growth is gathering greater momentum.

Kumar Birla Chairman, Aditya Birla Group

This Budget clearly shows the FM’s intention of continuing reforms and economic growth. Measures like increasing consumption, building equity markets and moving towards a GST regime, clearly shows the intent.

Implementation of GST will bring in great efficiencies. It will also attract large investments for the creation of consolidated, technology led infrastructure, warehouses and distribution centres for all industries in the consumption sector.

The apparel industry will benefit by the increase in abatement on excise duty for branded ready garments as it will help in reducing prices and, in turn, increasing consumption.

Overall it has been a balancing, growth-oriented budget.

Kishore Biyani Chairman, Future Group

The FM has presented a pragmatic budget with doses of good intentions for long-term growth but lacked the short-term punch to get growth going. There are indications that the government is sincere about controlling fiscal deficit going forward. The focus on R&D is good as the weighted deduction of 200 per cent for R&D expenditure in an in-house facility has been extended for another five years. For the IT industry, the request to exempt SEZ income from MAT has not been granted and this is disappointing. The APA will be useful to ease transfer pricing litigation in the future. The emphasis on leveraging technology as an effective platform for delivering public services is encouraging but needs to translate into implementation on the ground.

N Chandrasekaran MD & CEO, TCS

It is a pragmatic budget, aimed at building on the positives in the economy and staying the course on reforms. A fiscal deficit target of 5.1 per cent for 2012-13 is credible. The initiative to introduce three-year rolling targets for expenditure items is laudable as it provides an ongoing reality check. Going forward, I hope that these measures are vigorously implemented. The focus on irrigation and agri-infrastucture, including the setting up of Irrigation and Water Resource Finance Company, are directionally appropriate.

The budget could have also included some forward looking measures to improve manufacturing competitiveness. This would have helped to increase the employment opportunities and reduce the current account deficit.

Venu Srinivasan CMD, TVS Motors

The Union Budget for fiscal 2013 is a pragmatic exercise aimed at growth and stability in the backdrop of the challenging year gone. It also seeks to address the imperative of fiscal consolidation. The intention to contain subsidies at 2 per cent of GDP next year and 1.75 per cent of GDP within three years is laudable. Greater efficiency in distribution and lower leakage through use of the Aadhaar platform are key positives.

In addition, necessary policy and administrative measures to facilitate the execution of investment plans would need to be pursued. In the long term, the fundamental strengths of the Indian economy coupled with appropriate fiscal policies and investments in key sectors should take India back to a higher growth trajectory.

Chanda Kochhar MD & CEO, ICICI Bank

The FM deserves kudos for delivering an honest assessment of the current economic environment and has presented a budget based on realistic assumptions. The GDP forecast of 7.6 per cent for FY13 is credible in today’s scenario. Needless to add, the fiscal deficit still remains a prime concern. The FY12 fiscal deficit target at 5.9 per cent of GDP is higher than anticipated, but the transparency should be appreciated.

Admittedly, the budget has no big-bang reforms or concerted measures towards reduction of subsidies or a road map on increasing foreign direct investment. As far as the capital markets are concerned, the proposals are not radical but incremental in nature, which is positive for the markets.

Deepak Parekh Chairman, HDFC

Some bold decisions were the need of the hour and the Finance Minister has decided to bite the bullet in this Union Budget. The decision to spell out clear targets for subsidy reduction sends out a strong signal that the government wants to weed out inefficiencies within the system.

The budget’s continued focus on key sectors such as infrastructure and agriculture is welcome as it will boost economic growth.

One feels that the Finance Minister should have used this opportunity to also spell out a clear time frame for the rollout of important tax reforms such as GST and DTC. Overall, I congratulate the Finance Minister for taking a progressive approach.

Sunil Mittal Chairman, Bharti Group

The Finance Minister has presented a mixed budget with fundamentally positive steps in some areas, not enough in others and large concern areas like the projected fiscal deficit of 5.1 per cent. A few of the positives of the budget include raising the plan outlay for agriculture by 18 per cent; initiatives for research and development in agriculture and allocations for improving warehousing and storage facilities for agricultural produce. All of these, executed well and on time, will address the supply side on food and agriculture that will drive domestic demand and consumption. Similarly, some of the measures to create maternal and child malnutrition programs is an essential step in ensuring that the unacceptably high levels of malnutrition are addressed.

Vinita Bali MD, Britannia

The Union Budget 2012-13, has opened possibilities of ramping up capacity creation and utilisation in the infrastructure sector. It has been particularly sensitive to the needs of the power sector. The exemptions from customs duty for thermal power plants for two years and a full exemption on customs duty on coal will go a long way to help the power and steel sector. Another important measures is allowing External Commercial Borrowings to fund power project debt.

The viability gap funding is a major positive for the oil & gas sector, in terms of infrastructure building. This will bring in investments for the gas pipeline infrastructure. The resolve of the Government will be tested in keeping the subsidies below 2 per cent as targeted.

Prashant Ruia Group Chief Executive, Essar Group

Budget 2012 was set against an intense backdrop of structural challenges – rising fiscal deficit, inflation, slowing down of investments and political challenges for the UPA government. Several small steps have been taken to drive growth while maintaining consumption, reviving investment, boosting capital markets and widening the tax net.

Some of the positive highlights include, putting the FRBM implementation back on the agenda, capping the subsidy to 2 per cent of GDP with the promise of reducing it to 1.7 per cent and doubling the limit on tax-free infrastructure bonds to Rs 60,000 to customs duty relief for import of fuels like coal which could restart much needed investments in these sectores.