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Feel-good Budget turns feel-bad

BS Bureaus New Delhi/Bombay/Calcutta/Bangalore

The stock market crash and the hazy Tehelka tapes have totally obliterated the feel-good factor in corporate India generated only a few weeks ago by Finance Minister Yashwant Sinha's Budget for 2001-02. In a dipstick survey carried out by Business Standard, 70 per cent of the country's business captains felt that the euphoria generated by the Budget has died down and business is going to be in the dumps for months to come.

Says Wockhardt chairman and managing director Habil H Korakhiwala: "Certainly, the crises have affected the euphoria created by the Budget. It has created a lot of apprehension among the business circles."

Adds Titagarh Industries chairman JP Chowdhury: "The feel-good factor has now become feel-bad." Kajaria Jute chairman Sanjay Kajaria says: "Tehelka and the stock market crisis has changed the focus of the government from development." Adds Indo Rama Synthetics (I) managing director OP Lohia: "Investment sentiment is down now. Decision-making will be put off for a while."

The usually upbeat new economy wizards feel the same. Listen to Infinity Ventures chairman Saurabh Srivastava: "With Tehelka and the depressing stock market conditions, reverse sentiments have been created."

Says Kumud Goel, founder of KLG Systel and Jaldi.com: "Negative sentiments have been created in the business for no reasons at all. The crisis has created confusion and people are not sure about the political stability, which is affecting the economic stability. All this is damaging our image in the international market."

Adds Eastern Software Systems chairman and managing director Anil Bakht: "The euphoria about the Budget has died down. All the good proposals in the Budget may never get passed." The US meltdown has only added fuel to fire.

The survey covered 60 businessmen from all over the country cutting across various sectors like steel, automobiles, financial services, software, tea, textiles and jute. While 42 of them felt that the post-Budget euphoria was a thing of the past, 18 of them were of the view that the feel-good factor generated by the Budget would weather the raging political and financial crisis.

For instance, RPG Enterprises chairman Harsh Goenka says: "I am still bullish on the Budget. Tehelka or no Tehelka, the economy will still survive and do well." But such optimists are few in number.

As a Bangalore-based respondent notes: "It will take a little time to consolidate since BJP policies are like ayurvedic medicines and take a long time to show results."

Moreover, the sentiment could be worse as many businessmen refused to participate in the survey on the grounds that any adverse comment by them at this moment could land them in trouble.

The biggest casualty of the crises, 68 per cent of the respondents felt, would be the labour reforms proposed in the Budget and the divestment programme. The stock market crash is expected to unleash a wealth effect whereby people will curb their expenses.

At the same time, the slowdown in the US is going to impact not only software exports to the US but also Indian exports as the US is India's largest trading partner.

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