» Business » Budget 2012: Experts share their view on the Budget

Budget 2012: Experts share their view on the Budget

Last updated on: March 17, 2012 11:00 IST
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It is surprising to see that there is no direct focus being given to the IT industry in the budget this year.

World over, this decade is defined as a decade of information technology driven inclusive growth and the lack of focus on IT in the budget would not do any good to the already deteriorating image of India as an investment destination.

Having said this, there are lots of indirect opportunities that will arise as the government lay specific focus on areas such as skill development, micro finance banks, national land bank, custom duty relaxation on mobile phone parts, etc.

Companies who can focus on these priority segments from an IT standpoint are poised to benefit from the large scale that India offers.

Telecom, manufacturing and infrastructure are the key verticals to focus on. Flexibility on VC investments, opening up of Adhar platform, etc. would also provide ample opportunities to tech focused startups, says Praveen Bhadada, Director, Market Expansion, Zinnov.

Overall, there is no announcement in terms of direct initiative for the Indian Shipping industry in the Budget.

The customs duty on ships, which was introduced in the Budget last year, has now been notified to be withdrawn with retrospective effect. This was however implemented soon after the last year's budget itself.

There are positive opportunities that could arise for the Indian shipping industry from the various initiatives announced for the power, steel and ports sectors. These initiatives will help the specific sectors in their ongoing projects and growth plans.

These sectors being substantial users of Indian shipping services, the support provided to them over the next two/three year period would have a positive impact for shipping companies.

The amendments in service tax, including Negative List and Exempted List, together with the finalisation of Place of Supply Rules, will need to be studied in detail for any positive impacts on availment of Cenvat for the Shipping industry, says AR Ramakrishnan, MD, Essar Shipping.

This budget was as per expectations which were low. No bold economic announcements were made which is the need of the hour. However the budget did have some positives including:

i) External commercial borrowing for low cost housing projects besides road construction and power.

ii) Extension of interest subvention scheme for low cost housing

iii) Investment of up to Rs 50 lakh crore in the 12th five year plan, with half of this from private sector for Infrastructure development

iv) Service tax exemption on low cost mass housing up to an area of 60 square metre

v) Increasing the limit of tax free bonds for financing of infrastructure projects from Rs 30,000 crores to Rs 60,000 crore in 2012-13

vi) One year extension of sun set clause on tax incentives for infrastructure projects under 80 IA

vii) Rs 1,000 crore allocated for national skill development fund for 2012-13

viii) Full exemption from import duty on certain categories of specified equipment needed for road construction, tunnel boring machines and parts of their assembly

ix) Allocation of Rs 5,000 crore exclusively for creating warehousing facilities under RIDF

However the following were not considered:

i) Increasing the tax exemption limit on home loan interest

ii) Tax reforms for SEZ's

iii) FDI in retail as well as further FDI reforms in real estate

iv) Industry status for townships, mass housing projects, industrial parks, etc. Overall the budget was a balancing act when bold steps were required. Reforms in the insurance sector, banking, retail and manufacturing, besides clear implementation structure for Direct Tax code, are required urgently.

I hope post budget the Government focuses on timely implementation of infrastructure projects and various other schemes announced in the budget and more importantly announce major economic reforms required to stimulate the economy for a higher growth, Anshuman Magazine, Chairman and Managing Director, CBRE South Asia Pvt.

The Union Budget for fiscal 2013 is a pragmatic exercise aimed at growth and stability in the backdrop of the challenging year gone by and the broad consensus needed for various policy measures. It goes further to set a direction for fiscal consolidation to ensure long term stability and sustainability.

Fiscal 2012 has been a challenging year for the Indian economy. Both global and domestic factors resulted in a moderation of economic activity, led to persistent inflationary pressures and contributed to deterioration in the current account and fiscal position.

The Union Budget for fiscal 2013 has to be seen in the context of these developments. The Union Budget seeks to address the imperative of fiscal consolidation. In this context, the intention to contain subsidies at 2.0 per cent of GDP next year and 1.75 per cent of GDP within three years is laudable.

Greater efficiency in distribution and lower leakage through use of the Aadhaar platform are key positives that should contribute towards achieving this goal.

The Union Budget seeks to revive the growth momentum in the economy with a focus on infrastructure development, agriculture and rural economy and inclusive growth. Specific measures regarding the infrastructure sectors, including permitting external commercial borrowings, reduction in withholding tax and exemptions in customs duty are positive steps towards addressing some of the current challenges being experienced by these sectors.

In addition, outlays in critical sectors such as agriculture, education, healthcare and rural development have been enhanced.

Overall, the Union Budget adopts a pragmatic approach towards addressing the needs of the economy and managing the fiscal position. Continued incentives to critical sectors emphasise the government's focus on growth.

At the same time a reduction in the fiscal deficit through increased efficiencies in the subsidy and government spending mechanism as well as higher revenue generation has been emphasized. In addition, necessary policy and administrative measures to facilitate the execution of investment plans would need to be pursued.

The growth slowdown appears to have bottomed out and some pickup in growth can be expected next year. In the long term, the fundamental strengths of the Indian economy coupled with appropriate fiscal policies and investments in key sectors should take India back to a higher growth trajectory, says Chanda Kochhar, Managing Director and CEO, ICICI Bank.

The union budget tabled in the parliament was more of a safe play on the part of the government amid struggling fiscal deficit and timid growth prospects.

With inflation levels still persistently high, the proposed service tax hike could have a bearing on 'Aam Admi' further fuelling inflation strain, which has impacted the India growth story in the year 2011.

Finance minister has taken a strategic silence over cutting subsidies and expenditure but he had taken some steps to enhance government's revenue.

Widely anticipated hike in service tax has been implemented with the tax hiked to 12 percent from the present 10 per cent.

FM has also proposed a new tax exemption on equity investment for retail investors with a lock in period of three years. However FM remained muted on the proposal of treating profit or losses derived from commodity futures trading similar to equity derivatives.

Previously, there was a proposal for imposing transaction tax for commodity trading but no further statement has been made in this regard.


Unveiling the Union Budget for the FY 2012-13, Finance Minister Pranab Mukherjee in his Budget speech said that agriculture continues to be the prime priority for the government and the total plan outlay for agriculture and cooperation has been increased by 18 per cent from Rs 17,123 crore in 2011-12 to Rs 20,208 crore in 2012-13.

He proposed to raise the agricultural credit target for the FY 2012-13 to Rs 5.75 trillion and interest subvention scheme for providing short term crop loans to farmers at seven per cent.

As demanded by the Agriculture Ministry, interest rate on the crop loans was lowered to three per cent from the existing four per cent for those farmers who pay on time.

Apart from this, 100 billion rupees was set aside for Nabard to give to rural banks for short term loans and 200 crore rupees for research. Also, basic customs duty was reduced for certain agricultural equipments and their parts and fully exempted for the imports of expansion or setting up of fertilizer projects up to March 31, 2015.

Oil and Gas

Prior to the Union budget, the oil companies were proposing 100% compensation for the under-recoveries in line with year 2008-09, but the government restrained from any such moves in the budget presented.

The companies were also calling for an extension of the tax holiday for both exploration and refining activities by 10 years, as in case of power sector but this pitch did not materialize as per the market expectations.

All eyes were pinged on the potential decontrol measure on diesel, but government backed off from such shift, possibly citing the escalating inflationary levels in the country.

Oil and gas exploration companies were seeking an elimination of five per cent import tax on LNG but the Union budget on the contrary exempted Natural gas and LNG from basic customs duty.

The budget also revised Cess on Crude petroleum oil produced in India to Rs 4,500 per metric tonne. In an effort to cut down the burden on the aviation sector, the Union budget allowed direct import of Aircraft Turbine Fuel, much to the delight of struggling aviation industry.


Customs duty on 99 per cent purity standard gold bars has been doubled to four per cent from the previous two per cent. The proposal for levy of excise duty of one per cent on branded jewellery extends on unbranded jewellery too.

In the meantime, branded silver jewellery will be exempted from excise duty.


The budget also offers support to the agriculture sector by deducting the customs duty to 2.5 per cent on cane harvest machines. Import of equipments for fertilizer projects are being fully exempted from basic customs duty of five per cent for three years.

The budget proposes investment linked deduction of capital expenditure at 150 percent as against the current rate of 100 per cent in some businesses.

These sectors include cold chain facility, warehouses for storing food-grains and fertilizers, and container freight and warehousing for storage of sugar.

Steel & Metals

With infrastructure activities in the country taking a back seat, further hollowed by escalating debt concerns in the Euro region, overall metal demand is seen on a downside. The margins have also got a whipping due to high raw material cost, namely iron ore & coking coal and depreciation in rupee.

The union budget reduced the custom duty on nickel oxide from 7.5 per cent to nil. The government also hiked the custom duty on flat-rolled products of non-alloy steel from 5 per cent to 7.5 per cent. The customs duty on pipes and tubes used for manufacturing of boilers were reduced from 10 per cent to 7.5 per cent.

A full Basic Custom duty exception is being extended to Coal mining projects. Moreover, reduction in import duty in thermal coal will benefit steel manufacturing companies.

The union budget also scraped five per cent customs duty in coal and NG to nil in order to help the local power generating companies which are now facing a shortage of coal supplies and higher international prices. However, coal imports will impose concessional countervailing duty of one per cent.

This will be for two years till March 31, 2014. Finance minister lowered basic custom duty to 2.5 per cent on iron and beneficiation machinery will augment the growth of steel industry in near future.


The budget proposes various measures to promote the textile sector. The Finance Minister announced setting up of two more mega clusters, one in Andhra Pradesh and other in Jharkhand in addition to four mega handloom clusters already operational.

He also proposed setting up of three weavers service centre, one each in Mizoram, Nagaland and Jharkhand.  The Minister proposed Rs 500 crore schemes in 12th plan for promotion and application of Geo-textiles in the North East.

A power loom mega cluster will be set up in Maharashtra, says CP Krishnan, Whole Time Director, Geojit Comtrade.

The finance minister has presented a fairly pragmatic budget given the constraints, but the attainment of the target of 5.1 per cent is contingent on certain growth assumptions, which quite did not take off last year.

The Budget has not exactly put a leash on expenditure but has tried to rationalize subsidies on fertilizers and oil, though we need to see if they do work out at the end of the day. The Budget actually sees these numbers coming down from FY12(R).

Revenue is to come mainly from indirect taxes as there is a loss on direct taxes, which will tend to put pressure on prices especially when juxtaposed with the hike in freight rates just before the Railway Budget. Quite clearly, things will be tough on the price front going ahead.

The focus on infrastructure is laudable as are the schemes relating to tax benefits on the finance part which should help to garner funds too. However, the financing of the fiscal deficit will still be a challenge given that we can see industry also demanding credit as the economy gradually moves up the ladder.

The number of Rs 5.7 lakh crore is large. This in turn will definitely put pressure on liquidity and hence interest rates. In fact, the overall debt of the government is quite daunting at around Rs 50 lakh crore.

We would have been happy in case we did have some mention on reforms which are in the way of growth, which have been avoided in the Budget.

Again the optimism on disinvestment does raise some doubts given the past performance as well as the uncertainty about the markets. Finally, the test of credibility of these numbers is in meeting targets, which will remain the principal challenge, says DR Dogra, MD and CEO, CARE Ratings.

The doubling of the target for raising Tax free bonds from Rs 30,000 crores to Rs 60,000 crores for funding infrastructure and 50 per cent deduction for investment of Rs 50,000 by retail investors in equity shares are welcome measures and will boost growth, says Dr Suresh Surana, Founder, RSM Astute Group.

The optimistic growth rate projected for the economy is good news for General Insurance since it has lot of dependency on the growth of manufacturing sector. Budget has projected increased investments in infrastructure including highway development projects.

This also should help in generating premium for the general insurance sector. We need to wait for more details on the service tax negative list to see whether some of the aspects like payment of health insurance claims to hospitals are likely to attract service tax. Increase in service tax by two per cent increases the insurance cost for the customers.

i) Apart from this the budget appears to be neutral for general insurance sector.

ii) The tax exemption on preventive Medical tests upto Rs 5,000 would help increase conscious about health, hence creating opportunities for Health Insurance amongst customers. This should help increase the market and get first time buyers into the Health Insurance market.

iii) The upper limit for the 20 per cent tax bracket has been increased from Rs 8 lakh to Rs 10 lakh. This will increase the investible income for this income class, creating opportunities for Insurers to pitch their products to them, says KG Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance Co Ltd.

The budget bears the stamp of today's political and economic climate, and the Finance Minister has played it well.

While the Pharma industry would be disappointed as nothing substantial was announced for the sector, the five-year extension to the 200 per cent R&D tax deduction is a welcome move.

Initiatives like liberalizing of external commercial borrowing rules and the boost to investment in infrastructure sector are particularly laudable, says K Raghavendra Rao, CMD, Orchid Chemicals and Pharmaceuticals.

We as the umbrella body of real estate in the country feel disappointed by the unyielding measures taken by Mr. Finance Minister in the Union Budget of 2012-13.

Coming as a disappointment to us, the policy measures as rolled out in the Union Budget has failed to highlight the role of the housing sector in the economy while also failing to acknowledge the significance of employment generation by the sector and the need of housing in the country.

The Union Budget is clearly an opportunity missed by the government in achieving the dual purpose of providing shelter to weaker sections while boosting the GDP of the country.

The proposal of bringing in an umbrella tax structure to the cement industry will increase the cost of housing in India and will negate the development process of the sector.

Also providing ECB to affordable housing is a minor respite to the sector but its significance in the longer run will be absolutely meaningless.

With the proposed policy measures there is an inherent risk of liquidity drying up in the Indian Real Estate sector wherein the exemption of capital gains tax to invest in Small and Medium Enterprises may result in cash out from real estate.

From the Union Budget, we definitely expected huge impetus to affordable housing sector, which would have worked as an incremental boost to economy.

Another disappointing fact to arise from the Finance Minister's speech has been the interest subsidy on home loans which is definitely not enough for sustenance and will undeniably not help the Economically Weaker Sections or the Lower Income Group segment.

We definitely expected some boost to affordable housing segment in ways of special schemes and proposals wherein an interest subvention of 5 to 7 per cent for the LIG and EWS housing and promotion of rental housing through tax exemption would have helped in sustaining the growth process of the real estate sector.

As nothing came up, in a nutshell we can only comment that the policy recommendations in the Union Budget have been unsatisfactory to say the least and will not help the housing sector of the country as desired, says Lalit Kumar Jain, National President, CREDAI.

It is a budget aimed at promoting investment in infrastructure and achieving growth target. There are a slew of measures the finance minister has announced which will make resource raising easier for the large industry as well as small and medium entrepreneurs.

The hike in excise and service taxes are along expected lines as the government is slowly removing the fiscal stimulus it had introduced a few years ago.

As far as the oil and gas sector is concerned, we are slightly disappointed that the government has overlooked the sector by delaying any announcement on fuel price deregulation, which could have provided level playing field to the private oil marketing companies. However, we do believe that some action will take place on this front soon.

Removal of Custom Duty on Steam Coal and LNG is a welcome step. Non-extension of section 80-IB tax holiday benefit could affect future investment in Refinery Sector and thus deprive the country from emerging as a major global hub for export of petroleum products.

On the positive side, increased allocation for roads will lead to a higher demand for bitumen, which refiners like us will be benefit from. It is good to note that the government has begun a pilot project of direct transfer of subsidy to buyers of kerosene and cooking gas, says LK Gupta, MD & CEO, Essar Oil.

Another lost opportunity by our Finance Minister, who could have done significant lot to drive the consumer demand for real estate and turn the fortunes of the sector and in turn give a fillip to GDP growth in 2012-13.

While he mentioned that the objective of the budget was to create conditions for growth and to focus on domestic demand driven growth recovery, however he gave the real estate sector, which could have helped him meet these objectives, a miss.

The real estate sector holds significant prominence as its contribution to the Indian GDP is bound to grow beyond six per cent. Housing sector has linkages to more than 250 ancillary industries and employs more than 10 per cent of our workforce.

Having said that, industry, which is undergoing stress, was in immediate need of several concessions and support measures on easing of liquidity, relaxation of high tax structures and policy stimuli to facilitate a more congenial regulatory and development environment.

High costs of inflation and financing has choked demand and supply situation that is leading to a significant demand glut and impacting the social living conditions especially in fast growing geographies.

Nonetheless, a positive step forwards has been to allow foreign debt funding in affordable housing. Thankfully, which has been acknowledged by the government as housing is as much a critical need as food and education, two areas where government is quite proactive otherwise.

By not rolling back the one per cent interest subsidy government has again upheld the need for state intervention in the affordable segment. Well it does miss the point of how inflation has taken that slab from 10 lakhs to somewhere close to at least 50 per cent higher than that.

This also happens to be a segment, which gets easily impacted by interest rate fluctuations. So a wider scope and a stronger support mechanism could have been much appreciated.

Hike in indirect taxes will definitely impact the cost of delivery of real estate impacting overall demand. Further, shifts in tax slabs are too small to influence incremental demand.

No other positive measure to lend higher vibrancy into this sector was introduced or mentioned by Pranab Mukherjee. Any step towards attracting more FDI into the sector through relaxation of investment and exit norms providing a conducive environment for exits could have gone a long way in getting international interest back into Indian realty, says Om Chaudhry, Founder & CEO, Fire Capital and Chairman, Astrum Homes.

The Union Budget proposals announced today has belied the expectations of the domestic electrical equipment industry which was hoping for some corrective action from the Government to rev up the downward slide of the industry according to the Indian Electrical & Electronics Manufacturers' Association.

The slowdown in the power sector and escalating imports of electrical equipment, which have led to sharp deceleration in the growth of the domestic electrical equipment industry this financial year, have not been addressed.

The power transmission and distribution sector has been largely ignored while the generation sector has received some attention.

None of the major demands of the industry, including service tax exemption for all power projects, duty free import of CRGO electrical steel (a critical raw material for manufacturing transformers), demand for a level playing field for domestic electrical equipment manufacturers vis-à-vis imports, have been acceded to according to Ramesh Chandak.

The hike in service tax and excise duty rates, will further impact the top-line and the bottom-line of electrical equipment manufacturers and consequently their commercial viability, who are already facing a crunch and working at broadly 65 per cent of their production capacities.

Given the huge effort required in rural electrification, the fall in Central Plan allocation for Rajiv Gandhi Grameen Vidyutikaran Yojana from Rs 6,000 crores (BE 2011-12) to Rs 4,900 crores (BE 2012-13) is a matter of concern. Further, the revised estimates of Rs 3,544 crores against the budget estimates for 2011-12 show that funds provided have not been fully utilised.

The entire power sector value chain crucially hinges on the financial viability of the power distribution sector and reduction of aggregate technical & commercial losses, close to 30 per cent currently, is a national imperative.

The Restructured Accelerated Power Development and Reforms Programme, which is primarily focussed on reduction of AT&C losses, has seen a welcome hike in Central Plan allocation from Rs. 2,034 crores (BE 2011-12) to Rs. 3,114 crores (BE 2012-13), but here again the revised estimates for 2011-12 (Rs. 1,668 crores) show under-utilisation of allotted funds.

The additional Rs 10,000 crores provision for tax free infrastructure bonds for the power sector, reduction of withholding tax from 20 per cent to five per cent on interest payments on external commercial borrowings for power sector, the extension of the sunset date by one year for power sector undertakings for claiming 100 per cent deduction of profits for 10 years are some positive features of the Budget proposals, says Ramesh Chandak, President, IEEMA.

In my opinion, the Budget bears an average impact on the economy. While the Budget has shown some green signals towards infrastructure growth in India, it has fiscal roadblocks in its way.

The planned Rs 50 lakh crore investments in infrastructure is indeed worth appreciating although separate amendments and provisions for real estate sector would have been welcomed. Also, the proposed investments in health and education sectors will further boost the country's infrastructure to a large extent.

The fiscal deficit of 5.9 per cent of the GDP in the year 2011-12 has panned out very differently as compared to the target of 4.6 per cent, which indicates excessive spending by the government to keep up the growth momentum. 

Also the hike in excise and custom duties of two per cent will not only have a cumulative effect on the cost of construction on a whole but may also impact the revenues of India Inc substantially.

With land acquisition prices touching the roof, no rebate in home loans and interest rates and now an additional rise in cost of construction will postpone the ambition of an average homebuyer.

One more element that was off the Budget purview was emphasis on green practices and carbon emissions in India. At present the government does not have specific tax benefits or policies for accounting towards the higher costs incurred in green buildings like higher levels of depreciation and tax breaks.

In this direction, some thrust on green construction could have encouraged developers to adopted sustainable practices which in turn would have also helped in lowering the carbon emissions.

To address the fiscal deficit, the indirect taxes have been increased which will strain the nation's growth, says Zubin Irani, President, UTC Climate, Controls & Security (India).

The much anticipated and awaited Budget 2012-13 turned out to be "business as usual" with no major changes or path breaking efforts. It was more a continuation of last year's budget.

If we were to take out positives from the budget:

i) Bringing more habitations into Financial Inclusion fold through the Swabhimaan campaign;

ii) Continuation of subsidies and enabling direct transfer of cash through a pilot in 16 ditricts

iii) Increase in the scope of Business Correspondent services

iv) Setting up of ultra small banks

These steps augur well towards meeting the objective of financial inclusion. We have to see how things work out.

Also, the decision to further subsidize interest rate for SHG sector to 4% and enlarging the corpus is a positive step towards improving access to credit in rural areas.

Proper nurturing of SHG groups helps promote rural entrepreneurship and build assets. Introduction of a new law for micro finance institutions is welcome; though we don't have much information to say about its effectiveness. Details are still awaited.

We expect the new MFI law help strengthen the financial inclusion initiatives. Further, the financial inclusion industry can see a complete makeover if MFIs are permitted to operate in the same manner as the bank-SHG linkage.

However, GDP deficit continues to be a cause of major concern. Though there has been no change in the corporate taxes; increase in excise duty and service tax by two per cent each will make goods and services dearer.

For us and the industry, increase in excise duty results in higher cost to customers and service tax hike leads to higher cash outflow (this has no effect on cost to customer).

It may not be a great budget; but given the domestic and global scenario, may be this is the best the Finance Minister could do, says Rishi Gupta, CFO, Fino.

Overall this budget does not have much to look forward to. With reference to the real estate sector, there is an absence of any intent to address the issues concerning the sector.

High property prices and low demand coupled with tight lending scenario has further postponed the ambition of owning a house.

Among other challenges for the sector, unprecedented rise in urbanization is a challenge as well as an opportunity; however, the lack of road map will prolong the problems of the urban centers. Having said that, the residential segment has got some attention in terms of fund allocation to rural housing and ECB window for affordable housing projects.

Higher allocation for infrastructure and rural oriented scheme should have a positive cascading effect on the economy.

Thankfully, residential leases have been kept out of the ambit of service tax, says Pranab Datta, Vice-Chairman and Managing Director, Knight Frank India.

In general, it is a lack-lustre budget. The budget has anyway given some leeway for Dividend Distribution Tax at one level when the companies have many upstream companies/holdings and were taxable at every level.

The elimination of import duty on Nickel ore/concentrate from 2.5 per cent and 7.5 per cent to zero per cent is welcome. But the increase of service tax from 10 to 12 per cent will only stoke inflation.

There is no word about currency management and also about the relaxation of forex controls. The budget contradicts on ECB availability on Power sector, while the Policy is regressive on investment in general, says Prateek Gupta, Managing Director, Ushdev International.

The budget is positive for the infrastructure sector. Some of the initiatives announced like doubling the limit for tax-free Infrastructure bonds to Rs 60,000 crore, and exemptions in basic customs duty for thermal coal for power generation will be beneficial for the ports sector.

The budget provides for better access to credit and reduction of cost of debt in infrastructure sector through credit enhancement and take out financing. Reduction of withholding tax from 20 per cent to five per cent on ECB for Infrastructure is also a welcome move, says Rajiv Agarwal, MD, Essar Ports.

The Union Budget has been a disappointment for the wind energy sector at a time when the wind energy was generating a sizable share of five per cent of electricity at the All India level.

Even after our representation to the Union Planning Commission and the Union Ministry of New and Renewable Energy, the wind energy sector did not see any priority sector lending and reduction in the interest rates making the wind energy projects unviable with the present tariff rates.

We were looking for a level playing field with the conventional power, but we find is that the subsidies for Oil is increasing and duty free coal is being allowed.

While the Union Finance Minister has announced customs duty exemption on imported coal and natural gas for power projects, there was nothing supportive in the Budget for the wind and solar energy in particular.

We had great expectations in the Budget for coming out with investor-friendly initiatives towards the wind energy sector but we feel that our high expectations have been belied, says Ramesh Kymal, CMD, Gamesa Wind Turbines.

This budget sought to lay the foundation for the 12th five-year plan. This year there has been a fair balance on the moving variables front.

While there have been significant initiatives taken for infrastructure and agriculture, there could have been more relief on the Income Tax and Service tax to balance the budget plan. There is a marginal increase in NHRM provision for healthcare, which is a prerequisite in a county like ours, and the focus on education is commendable. In terms of subsidies (fuel and basic amenities), it is being played to the gallery.

Though there is a thrust on infrastructure, agriculture, education and healthcare, there is less cheer to the IT industry and to the common man. We are hoping that this budget lays a foundation for the nation to become the India we envision in 2020, says Rameshkumar V, Chief Financial Officer Global, CSS Corp.

There are two key policy directives in the Budget that augur well for the education sector. The allocation for PPP, particularly in the core education is both an impetus and an acknowledgment of the importance of the private sector in education infrastructure.

The Credit Guarantee Fund for education loans will particularly benefit aspirants with low financial security to access loans at the lowest end of the skill development market.

Service tax exemption for school education while along expected lines is a decidedly welcome step also, says Shantanu Prakash, CMD, Educomp Solutions.

Government's allocation of Rs 1000 crore for National Skill Development Fund is along expected lines, but heartening all the same since this will allow for a swift roll out of vocational education to our youth across the country, including those in Tier II and Tier III cities, where it is sorely needed.

Introduction of Credit Guarantee Fund for Education Loans is something the industry was keen on, and we are glad that the Government has taken cognizance of this.

This will allow those at the bottom of the pyramid to avail of loans for job linked vocational skills and move up the value chain.

However, what is a bit disappointing is that Skill Development has not been exempted from Service Tax, which would have provided a major boost to the sector, says Sharad Talwar, CEO, IndiaCan (Educomp-Pearson JV).

Announcements made in Budget 20102-13 especially the increase in service tax and excise duty rate is bound to increase the input costs thereby leading to increase in the cost of buying real estate.

This does not forebode well for the industry. Allowing ECB for affordable housing is a welcome move. The Government could have certainly increased the exemption limit on interest paid for housing loans.

The government has also been silent on pushing reforms and introduce policies to increase housing stock. Overall the reaction is mixed, says T Chitty Babu, Chairman & CEO, Akshaya Pvt Ltd.

The budget strives to provide a welcome relief on various fronts in the short run to address most of the issues of the power sector.

Liberalisation in ECB financing will enable availability of more debt resources at a lower cost for the power sector. DDT rationalization will help improve return on equity for the multi-tiered structure of most power companies.

To sum up, this, along with steps being taken to improve coal availability, signals a significant turnaround for the power sector, says V Suresh CFO Essar Power Business Group.

The fiscal deficit number has been penciled at 5.1 per cent for FY13. The provisions for fuel and fertilizer subsidies look inadequate and the fiscal deficit number would be closer to 5.5 per cent in absence of meaningful hikes in auto fuel prices.

The government-borrowing programme at Rs 4.79 lakh crore is quite high and would result in further hardening of bond yields.

Government's focus clearly has been to shore up the revenue side with increase in Indirect tax rates. We were expecting a slight increase in Service tax and excise duty which happened with the rate changing from 10 per cent to 12 per cent.

The sectors which primarily will take the hit are from this will be automobiles, FMCG, tourism & cements. The government has expanded the service tax coverage by having a 'negative List' for service tax with all but 17 services becoming applicable for service tax.

No timelines have been given for implementation of Direct tax code and Goods and services tax. On the expenditure side, government has provided for Food subsidy of Rs 75,000 crores and is looking to implement Food security bill in select 50 districts.

The allowances for various other entitlement programmes have not been increased very meaningfully. There was a lot of talk on boosting infrastructure activity but no concrete provisions have come in.

A positive step for the power sector was abolishment of five per cent import duty on Coal. This move will be positive for most of the power generating companies.

As far as the market is concerned, budget is a non-event. The market will start focusing on Q4 FY12 earnings which start from 10th April and RBI policy in the third week of April, says Varun Goel, Head, Equity PMS, Karvy Private Wealth.

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