New Delhi: Indian industry on Friday welcomed the Union Budget for 2010-11 saying it was a balanced approach though it expressed disappointment over the hike in minimum alternate tax (MAT) from 15% to 18%.
The captains of the industry lauded the concessions given to individual and corporate tax payers, saying Mukherjee had done a “good” job.
“The Finance Minister has done a good in balancing job... He has been able to contain the fiscal deficit at 6.9%, which is very good,” said Harshpati Singhania, President of apex chamber Ficci.
“However, there is a big surprise and disappointment on MAT. Decrease in surcharge would be eaten by increase in the MAT rate,” Singhania added.
CII President Venu Srinivasan said: “It is a very balanced and responsible budget. The growth will continue with this Budget. The changes in Income Tax slabs are a welcome step.” He also complimented the Finance Minister for calibrated roll back of stimulus measures, which is how the industry had wanted it.
“The only dark spot is increase in MAT.”
Bharti Enterprises Vice Chairman Rajan Mittal and president elect FICCI said, “We would have been much happier if the MAT have not been increased. While reduction on surcharge is welcome, increase in MAT is a disappointment,” Mittal, however, said the Budget is growth oriented and “good part is that he has shown the road map for the implementation of GST (Goods and Services Tax).”
FIEO President A Sakthivel welcomed the extension of concessional export finance regime till 31 March 2011, but expressed disappointment on exclusion of some of the labour intensive sectors.
“Exclusion of textiles, leather, marine and gems and jewellery will add to the woes of these sectors as some are still showing decline while other exhibited growth on very low base,” Sakthivel said.
Infosys Human Resource director Mohandas Pai said hike in MAT will not impact large companies, though smaller IT companies will be hit. “The country has lost thousands of jobs in IT industry. So, it’s disappointing for IT industry.” Meanwhile, Infosys CEO Kris Gopalkrishanan said that the move will not impact the company.
Kotak Mahindra Bank vice chairman Uday Kotak said the Finance Minister had played a balancing act of trying to get all the concerned actors on board for the GST. “It will be credible if the GST could be brought in by April 2011.”
ASSOCHAM president Swati Piramal called the Budget pragmatic, positive and development oriented aimed at inclusive growth.
She said Mukherjee has sufficiently incentivised renewable energy, infrastructure, research and development and equipped these sectors with reasonably higher allocations. “Giving tax credits on R&D is a major welcome step, which will encourage innovation and reduce manufacturing cost.”
L&T Chief Financial Officer YM Deosthali said, “This is not a surprise Budget ... The thrust on infrastructure is continuing ... The only surprise was MAT ... as 15% was in any case a very high.”
Consultancy firm PwC managing director Deepak Kapoor said that the finance minister’s emphasis on reducing the combined debt-GDP ratio and fiscal deficit is a good sign of fiscal consolidation.
Samsung India MD R Zutshi said, “I would term the budget as a good budget since it seeks to make economic growth more inclusive.”
“The changes in tax slabs will put more money in the hands of the common man, which should spur the overall economic growth,” he said.
Religare and Fortis group chairman Malvinder Mohan Singh said that Mukherjee has focussed on growth and talked about bringing down deficit.
Gaurav Dua, head research, Sharekhan Ltd said, “the Budget addresses fiscal concerns with no apparent negatives. Finance minister has addressed the key issues of containing fiscal slippage and outlined a clear roadmap for the next three years. The net government borrowing program for 2010-11 is also well under control and allays fears of crowding out of bank credit for private sector. Tax proposals related to corporate and capital markets were benign and in line with expectation with no negative surprises. The thrust t on reforms and announcement like banking licenses for private sector non-banking companies were unexpected positive moves.”
Rajiv Ranjan Mishra, managin director of CLP India, said, “Overall, the budget is good news for the infrastructure sector with a welcome thrust on super-critical technology for large scale thermal power projects.”
“Building a balanced energy generation portfolio, with equitable allocation between thermal and renewable energy projects is now important for the government to focus on; the setting up of a National Clean Energy Fund and encouraging competitive bidding for coal blocks are the progressive proposals coming from the Union Budget 2010-11.”
“With the establishment of a regulatory authority, we hope to witness speedier execution of projects that are announced; for CLP India, it is clear that our continued emphasis on triple bottom line will remain - meeting environmental, social and economical objectives are integral to sustainable growth. At the same time, the increase in Minimum Alternate Tax rates is a negative for the establishment of new generation facilities. In a scenario of tariff-based bidding for thermal projects and fixed, regulated tariffs for renewable projects, increase in these taxes affect the economics of these projects negatively and have an adverse effect on investor sentiments”
Ananda Mukerji, MD & CEO, Firstsource Solutions, said “It’s a balanced and overall positive budget. Given fiscal constraints, the continued investment in infrastructure, education and health is a good sign. However 14 -16% growth in investment in historically hugely underinvested areas like primary education and healthcare is not going to be enough for sustained development in the long run and it would have been good to see bolder steps in this area. Commitment to a clear target of fiscal reduction and a roadmap of getting there is a laudable effort.”
“While the fine print will have to be examined the Government’s stated intention to ease the refund of service tax credits to BPO units is also good to hear.”
“A clear disappointment is the lack of extention of STPI benefits given the huge role mid-sized IT and BPO companies play in employment generation in the country. This clearly has the risk of reducing India’s attraction as a a global outsourcing destination. Another retrograde step is increase in MAT. Though for Firstsource specifically this has very little cashflow impact since part of our revenues in any case attract deduction at source.”