R Parasu Raman, chairman, CII -- southern region and chairman and managing director, Novar India Ltd, speaks to Shobha Warrier on the Budget.
As the Chairman, CII -- southern region, and also an industrialist, what were your expectations from the Budget? Did it meet with your expectations?
We were very keen that the number of infrastructural issues be addressed because we feel if the economy has to grow at 9 to 10 per cent, manufacturing must grow at least by 12 per cent. To make that to happen, we had asked for a number of infrastructural issues to be sorted out. On that score, significant allocation investments have been made. So, the intention is extremely good.
However, the delivery mechanism of the entire allocation is through government bodies. One would have expected a mix or a participation of private sector in bringing some efficiency and speed in that area.
On the negative aspect, at the stage at which India is in the world economy, rising very sharply and becoming a dominant player, one would have expected significant fillip to be given to policy and direction of the industry. For example, there is a policy and directional issue in getting the big duty down from 15 to12 and half per cent towards the Asian level. One would have expected it to go straight to 10 per cent.
Labour reforms is another area that was not touched. There was no talk about divestment at all. We are talking about 30,000 mw of power generation in the 10th plan, but he has not talked about the 28 to 35 per cent of transmission-distribution losses, which can be done through efficient private sector participation.
One of the two other areas of disappointment is the much awaited abolition of fringe benefit tax not happening. Second, the road map for goods and services tax at 2010 is very, very distant. One should expect it to happen much faster, if you want the industry and commerce and trade to deliver the kind of 10 per cent of GDP growth as expected.
You said you were disappointed with the finance minister not talking about from where the money is going to come for the initiatives he has made. Is it another worrying factor?
When he normally increases taxes, he gives reasons for where it is going to go. This time, he didn't talk about any increase in tax except on a few cases here and there; not very significant in terms of volume. So, I guess the entire funding will come from the buoyancy of the economy.
If you take the direct tax collection, in 2005 itself, there has been a significant upward curve compared to the last three-four years.
Were you expecting any new tax proposals?
He had made it clear two-three days ago that there would not be any significant tax impact. I think people were prepared for that. One also knows that the regime is for rationalisation and reduction of taxation to make India competitive. So, the fact that he did not raise taxes did not come as a surprise.
Which sector will benefit more from this Budget and which is the most neglected one?
A number of sectors like the gem and jewellery, education, the small car sector, leather, footwear, textiles, IT, etc will benefit.
When the economy is at such a buoyant stage, do you think the finance minister could have done better?
Yes, I feel strategic, policy based fillip could have been given to industry to continue to sustain the growth that we have now. A lot of what was done will bring sustainable continuous growth, but he could have given some more direction for the other aspects of economy like the manufacturing sector. If the industry is growing at 9.1 per cent today, and you want it grow at 12 per cent in order to support the 10 per cent GDP, it may not happen. The growth will remain at 8 and 9 per cent.
How will you rate the Budget out of 10?
I will give it 6-7/10.