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This article was first published 13 years ago

Long on intent, short on content

Last updated on: March 1, 2011 14:03 IST

Image: Pharma industry needs incentives
Photographs: Reuters S Ramesh, President, Finance and Planning, Lupin

The FM's Budget, simply put, is long on intent but short on content. While the strategic focus of the budget on various matters such as fiscal consolidation is explicit, the process by which it will translate into a tangible outcome is still to be made unequivocal.

The Budget has little for the pharma industry. While the weighted deduction on R&D is a necessary fiscal incentive given to the entire sector in several parts of the globe, there was also a need to incentivise exports through fiscal measures to maintain the sector's global competitive situation, which unfortunately is not the case with the MAT introduction on SEZs and the phasing out of EOUs.

Long on intent, short on content

Image: Clarity needed on insurance law bill
Photographs: Reuters
On the insurance industry front, we would like to better understand the FM's proposal to move the Insurance Laws (Amendment) Bill, 2008 in Parliament.

The details of this bill were not shared in the Budget speech but we do hope that this long pending bill to allow for a higher share of FDI in the insurance sector will be tabled soon.

Increasing the FDI cap to 49 per cent from the existing 26 per cent will bring in much needed capital to the industry and will help increase insurance penetration levels in the country.

Reforms are outside the Budget

Image: Budget has lost its significance
Photographs: Reuters Kislay Kanth, Head of Research, MAPE Securities

The Union Budget for FY2012 was presented in the parliament. The Budget over the years has continuously lost its significance in the context of overall economic growth and corporate performance, as fewer reforms can be pushed as a part of the Budget itself.

Most of the reforms are outside the budget.

 

Reforms are outside the Budget

Image: Aim is to boost rural income
Photographs: Reuters
However, this year there was a very low level of expectations from the Budget and thus a Budget, which highlighted strengths of the economy and directed its spending in a more sharper fashion to priority areas; while maintaining the fiscal improvement targets at just 4.6 per cent fiscal deficit for FY2012 seems to have cheered the participants.

The mere fact that the government could present a good Budget is good enough for markets. The clear theme is social inclusion and boosting rural income and consumption base, which will help the economy in the longer term.

Govt committed to sustainable growth

Image: There are 13 million vehicles in India
Photographs: Reuters Kishor Patil, CEO and MD, KPIT Cummins Infosystems

The Finance Minister's announcement on setting up of a National Mission for Hybrid and Electric vehicles coupled with reduction in excise duty on the hybrid conversion kits and their parts, are welcome measures that reinforce government's commitment to promote sustainable growth in India through hybrid and electric vehicles.

There are about 13 million vehicles in India currently, and there definitely exists a huge opportunity for solutions that can make these vehicles more fuel efficient and reduce green house gas emissions.

Govt committed to sustainable growth

Image: Budget will encourage use of fuel efficient vehicles
Photographs: Reuters
The reduction in excise duty on the conversion kits and their parts from 10 per cent to 5 per cent, will enable deeper penetration of hybrid technology by making it affordable, and encourage the conversion of more fossil fuel-based vehicles into fuel efficient and environment friendly hybrid vehicles.

These moves will also provide a very strong boost to the development of indigenous hybrid technologies.

As a leader in technology solutions for automotive and transportation industry, we are committed to foster innovation in this space and will continue to bring in frugal and sustainable solutions like REVOLO that increase fuel efficiency and reduce green house gas emissions of the vehicles.

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