It's a growth oriented Budget: Industry leaders

Industry leaders opine that FM has careful drafted the budget and it focus on the growth. Here is what they have to say:

"A comprehensive development oriented budget"
Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance

The Finance Minister has been ambidextrous in addressing the development issues in a comprehensive manner while keeping fiscal deficit under control. This Budget has absolute clarity in all round infrastructure development of the country.

Therefore, agriculture, health, education and almost all infrastructure areas have been addressed.

Extending infrastructure status to cold storage chains, augmentation of storage capacity through private sector participation and making capital investment in storage capacity eligible for Viability Gap Funding are big steps forward.

This, along with the increased allocations for the various sub-programmes under Bharat Nirmaan, will boost development of rural infrastructure and lead to long-term solutions in the supply-chain management of agricultural produce.

On the infrastructure front, the move to raise FII investment limit in corporate bonds is a positive step.

Also allowing FIIs to invest in unlisted bonds with a minimum lock-in period of 3 years and the provision to trade such bonds among themselves within that 3-year period will help attract the much needed risk capital needed for this sector.

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The extension of individual investment in infrastructure bonds up to a maximum of Rs. 20,000 to mobilise household savings into infrastructure has been extended by a year. However, this cap should have been increased.

The tax incentives extended to attract foreign funds for infrastructure financing is another positive step.

A 23 per cent jump in allocation for infrastructure is indeed a welcome step. The announcement of the Infrastructure Debt Fund and the reduction of withholding tax from 20 to 5 per cent will encourage substantial investments from overseas investors.

In the financial sector also, investments by foreign investors in mutual fund will help in giving the much needed boost to the sector.

Aiming to restrict the fiscal deficit to 4.6 per cent of GDP is commendable.

What is more praiseworthy is moving away from the issuance of oil bonds and relying on direct transfer of cash subsidy on kerosene, fertilisers, etc. so that there is no misunderstanding on the fiscal deficit figure.

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"Mixed bag for logistics sector"
Vineet Agarwal, executive director, Transport Corporation of India (TCI)

The minister has announced a slew of measures to boost investment in the infrastructure sector with a view to propel the announced 9 per cent growth trajectory by 2012.

To enable the development and the flow of funds to the sector, FM has proposed tax-free bonds and has increased the FII limit for investment in corporate bonds.

Government's plan to come up with a comprehensive policy for further developing PPP projects will definitely improve the infrastructure conditions however what is currently required is a speedy single window approval system.

The Minister has not left out the Logistics sector, the backbone of the economy, and has set aside Rs 2000 cr (Rs 20 billion) for warehousing, mainly in the area of agriculture. Augmentation of storage capacity through private entrepreneurs and warehousing corporations has been fast tracked.

Also, to pave way for introduction of the long-awaited GST regime the Constitution Amendment Bill will be presented in the parliament which will change the warehousing today is.

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We are hoping that GST will be implemented soon which will replace the cascading effect created by existing indirect taxes.

Providing cold storage chains an infrastructure status is a welcome move as it will help improve and add infrastructure in this area.

The scope of exemptions to improve storage and warehouse specialty for agricultural produce has been further enlarged giving full exemption from excise duty on air-conditioning equipment and refrigeration panels for cold chain infrastructure has been extended and conveyor belts have been included in the full exemption from excise duty to equipment.

The removal of duties on imports of spares for ship owners is also a welcome move as for domestic shipping firms as repair costs will go down.

However the government should have considered giving the logistics sector an infrastructure status on a whole.

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"Continues to focus on growth story"
Narayan SA , director, Kotak Securities

The Budget is commendable, as without making any major tax changes it has targeted a 4.6 per cent fiscal deficit for 2011-12 by focusing on achieving 9 per cent growth.

The net borrowing target of Rs 343,000 crore (Rs 3,430 billion), lower than what the market expected will help in moderating the pressure on interest rates which is good for the industry and the equity market.

By not increasing the excise duty the Finance Minister has ensured the current growth trajectory is not disturbed and that collection targets are met from higher volumes. The cash based transfer mechanism for subsidies is a very positive step.

Increasing the limit of FII investment in corporate bonds and infrastructure bonds are steps in the right direction to improve liquidity in the market and make funds available to the corporate sector.

Allowing the Indian equity mutual funds to source funds from foreign investors is good for the growth of the Indian Mutual Fund industry and will also result in higher flow of foreign funds into equity markets over a period of time.

Stand alone while the budget is positive for the equity markets, other factors like the crude oil price and the global scenario will largely decide the direction of the market in the medium term.

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"Excise duty on Branded Jewellery will hamper growth of the modern organised sector of the jewellery industry"
Mehul Choksi,  CMD, Gitanjali Group

Overall it is a good budget that will boost growth and encourage the expansion of the domestic market, which will benefit all sectors of industry.

However for the gem and jewellery industry there is a negative aspect - the one per cent Central Excise levied on Branded Jewellery will hamper the growth of the modern organised sector of the jewellery industry. It should be reconsidered.

Also the introduction of MAT will add to difficulties currently being faced by SES developers and units in the sones.

The introduction of self-assessment for Customs for import-export and simplification in procedures for refunds as well as exemption from Service Tax for services consumed within a SES is a welcome.

We also welcome the reduction in the surcharge on corporate tax and the lower rate on dividend received by an Indian company from its foreign subsidiary."

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"Nailed the crucial issue of infrastructure funding"
Gautam Adani, chairman, Adani Group

The UPA government's budget for 2011/12 can be termed as a pragmatic and forward looking balanced effort, across the social spectrum.

While the urban middle class gets some relief by way of an increase in income tax exemption levels, a slew of initiatives have also been announced for the populace in rural markets.

Some of the initiatives are aimed specifically at the poorer sections of the society. The Finance Minister, Pranab Mukherjee has clearly indicated that the Indian economy is poised for a 9 percent growth in the 2011-12.

Several promises have been made ranging from implementation of Direct Tax Code to finalising Goods and Services Act. These will be done by variety of committees and task forces, hope the process is speeded up and the time line promised is maintained.

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While Mukherjee's announcement highlight the UPA government's continued focus on setting right India's infrastructure, but economic reforms and tax breaks to India Inc remain un-addressed.

Mukherjee has tried his best to balance the earnings and spending of the UPA government to fund its ongoing development agenda. He has also walked the tight rope of managing inflationary pressures and containment of fiscal deficit.

The Finance Minister has nailed the crucial issue of infrastructure funding, which has plagued the country for several decades by announcing several measures to enhance capital inflow in Indian infrastructure.

Mukherjee has announced issuance of tax-free bonds worth Rs 30,000 crore (Rs 300 billion) and extending income tax exemption on tax-saving infrastructure bonds up to a maximum of Rs 20,000 (Rs 200 billion) for one more year.

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The government intends to spend Rs 2.14 lakh crore as budgetary support for the infrastructure sector in 2011-12 and will set up an infrastructure debt fund to promote foreign investment in the sector.

The decision to step up infrastructure funding via a vibrant debt market is a welcome step and a right decision to resolve funding bottlenecks in our country. A robust corporate bond market will give much needed fillip to strengthen infrastructure funding.

We also welcome the doubling of the foreign institutional investment limit to $40 billion in corporate bonds, which is a major shot in the arm of India Inc.

Infrastructure funding in India is a deficit that perhaps poses the biggest challenge for the economy and its aspiration to achieve a double-digit economic growth over a long period.

But, Mukherjee seems to have left untouched the constant issues of lack of clarity on policies and long term taxation that are plaguing the sector since several decades.

The Indian government's initiative to raise the domestic palm oil output to 300,000 metric tonnes per year by infusion of Rs 300 crore (Rs 3 billion) is welcome step and will help enhance local production of palm oil.

A marginal increase on Minimum Alternative Tax from 18 to 18.5 per cent for corporates and inclusion of SES developers under the MAT purview is not in the interest of India Inc, as SES were set up to sharpen competitive edge to the industry.

At the time of formulating SES Act, this was discussed in detail and it was decided not to levy MAT from SES developers and units in SES, this change midway has surprised many investors.

However, removal of excise duty on equipment for power generating plants under the Ultra Mega Power Project policy is a relief.

This measure could have been extended to new power generation units which employ environment friendly Super Critical technology.

The other noteworthy item is setting up an inter ministerial group for mining, this will help in arriving at an optimal and comprehensive decision and ensure faster and timely implementation of mining and mining associated industries like power, metal production etc.

On the whole, I feel the Union Budget 2011 will provide further impetus to the Indian economy and Mukherjee's efforts need to be lauded in the context of the current political and economic scenario.