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'A reformist Budget from Chidambaram'
July 12, 2004 17:01 IST
Finance Minister P Chidambaram presented the United Progressive Alliance government's first Budget last Thursday. The India Inc generally welcomed the Budget. Here are some reactions from the corporate world.
K.Vasudevan, president, Alstom Ltd.
I would definitely call this Budget a reformist one. The good thing about the Budget is that it has maintained the continuity that was needed. The only difference is that the thrust is on agriculture this time around.
The finance minister has shown the right direction and sent the right signals by increasing the foreign direct investment cap in telecom, insurance and civil aviation.
The only thing that has disappointed me is what he has done for the power sector. The Economic Survey promised a lot of things for electricity boards but he has not allocated any specific funds to the sector. But I have to wait and read the fine print on 81-A which talks about incentives on refurbishing and maintenance.
The important thing is that the Electricity Act 2003 has not been tampered with. Only if the Electricity Act 2003 is implemented in full force, the power sector will improve.
I am happy that the finance minister has not gone overboard on subsidies.
Rating: I would give 6 out of 10 to the budget.
Lakshmi Narayanan, president and CEO, Cognizant Technologies
In the context of the IT industry...
"No major changes have been announced for the IT industry, and as such, we feel it's a good Budget for the industry. There were some concerns on taxing this industry, but the finance minister has laid them to rest. By ensuring stability and continuity in the policies pertaining to the IT industry, the finance minister has brought about greater positivism, which in turn, should sustain the high confidence of overseas investors in India."
On the desalination initiative in Chennai...
"The commitment to set up the country's first large-scale desalination plant in Chennai, and along the Coromandel coast, by investing a significant sum signals that out-of-the-box initiatives would be taken to address teething concerns."
Shobhana Kamineni, director, Apollo Hospitals
I think the Budget presented by P Chidambaram is a precursor to a reformist Budget. Yes, there are some good popular measures in it. We expected a Budget with emphasis on agriculture; so we are not uncomfortable with it.
What we are uncomfortable with, and which we need to watch is the fiscal deficit. The last government could reduce the fiscal deficit by almost Rs 13,000 crore (Rs 130 billion) through divestment. We saw the Left colouring come up very clearly in this Budget. Surprisingly, it's mostly contained.
Industry is quite confident after the Budget. Once the dust is settled, the stock markets also will go up.
Compared to what he did to agriculture, education, etc, it is a little bit disappointing that he has not done much to healthcare at all.
He talked about the role of private-public collaboration in ITIs but there are a lot more sectors where private players can play a major role. I think he didn't want to rock the boat too much; he was just testing the waters.
I will give a rating of 8 out of 10 to the Budget.
Mallika Srinivasan, director, TAFE (Tractors and Farm Equipments Ltd)
I am happy because my industry seems to be in the news! I am also happy because of the thrust the Budget has given on agriculture.
We were definitely expecting a Budget with stress on agriculture and rural sector because the mandate of the people showed the rural sector needed attention. It was the voice of the people of rural India that we heard in the election results. They said: you pay attention to rural India, you pay attention to agriculture. And, the result is this Budget.
I would not use strong words like, the previous government neglected the rural sector or anything like that. I would only say it was a sector that did not receive the kind of attention it deserved. Anyway, we were certainly expecting a thrust on agriculture. So, we welcome the Budget wholeheartedly.
What impressed me was the Budget allocation to water development, and most importantly, the decision to double the quantum of credit in three years' time. This is clearly an aim to expand the rural market and rural credit.
We would like to see as follow-through not just the quantum of credit but interest rate for agricultural lending also coming down. Now, it ranges around 10.5-11% which is far more expensive than car loans, two-wheeler loans, etc. So, we feel the interest rate also should be brought down. Only then, the kind of credit expansion which we are aiming at would take place.
The finance minister also talked about governance in rural lending institutions, which is once again a welcome move.
All that the finance minister has announced for our sector is in the right direction. Now, we would really look forward to seeing all this implemented successfully. Implementation is what determines the success of a project or idea.
What has gladdened me is the reduction in the excise duty for tractors. This will make tractors available to the farmer at very reasonable prices. Right now, we are not yet clear about the extent of this benefit as along with excise duty, we have input duties too. We have input duties of about 12%, which we were adding to the final product duty till now. Now, we don't have a final product duty. Unless there is going to be an exemption on the input duty also, prices of tractors will not come down fully. Because we have an input duty of 12%, prices will now come down only by 3-4%. Only when this is clear, we will know how much of this exemption is going to benefit the customer.
Overall, I would call this budget an agriculture-focused budget, and I would give 7 out of 10 marks to it.
(As told to Shobha Warrier)