Financial Daily from THE HINDU group of publications
Wednesday, Mar 02, 2005
Industry & Economy
Budget - voices
Mr Kumar Mangalam Birla, Chairman, Aditya Birla Group
IT is an excellent Budget. It will go a long way to help sustain GDP growth rate at the higher level of around eight per cent. It will definitely unleash the country's economic and human capital strength. It has also endeavoured to give rural India a major shine.
Dr J. J. Irani, Director, Tata Sons
"In general, the Budget is positive throughout. I don't know how he will balance his figures, but I suppose that will be through growth. For steel, it needs to be seen if the import duty reduction is for coking coal with high ash content or low ash content. If the former, it will have no impact, as no steel company imports coking coal with high ash content.
"The increase in excise duty on steel from 12 per cent to 16 per cent is unfortunate. The industry had actually asked for a reduction from 12 per cent to eight per cent. It is incorrect for the Finance Minister to say that it is MODVAT-able, as that isn't case for long products. For long products, customers will end up paying more."
Mr Adi Godrej, Chairman, Godrej Consumer Products Ltd
The Finance Bill has several positive moves, no negative moves at all. Among the positive moves the announcement of National Goods and Services Tax is a very good move.
There is a strong emphasis on infrastructure and rural development. The Finance Minister has clearly enunciated measures for these sectors. Among the other positives is the reduction in peak Customs duty on imports. Besides, he has allowed credit for Minimum Alternate Tax (MAT).
The corporate sector clearly stands to gain from this, since the overall direction for the economy is positive. Additionally, the marginal reduction in corporate tax should benefit companies.
Mr Shashi Ruia, Chairman, Essar Group
"Mr Chidambaram has quietly gone in for further reforms without offering any grandiose schemes. Bharat Nirman is a case in point. Creation of SPV (special purpose vehicle) for funding the infrastructure projects, if it really is funded, is another. The manufacturing competitiveness programme requires to be extended to sectors where India has a competitive edge, steel-making for instance."
Praveen Kadle, Executive Director, Tata Motors
"It is a balanced Budget and it has addressed three main issues infrastructure-related investments in rural and urban areas; agriculture and rural economy through the Bharat Nirman scheme and manufacturing.
"Though he talked of manufacturing competence, he did not discuss how to address it beyond the setting up of a task force. Duties are being brought down in line with earlier plans and there is to be a rationalisation of corporate tax rates. With the economy doing well, it will enhance economic growth."
Ravi Kant, Executive Director, Tata Motors
"One good thing for the automobile sector in the Budget is that highway development is being taken further ahead. The incentive announced earlier for R&D expenses has been extended and there have been some import duty reductions. But excise duty on steel has gone up. The excise duty cut, which the automobile industry was hoping for, also did not happen."
Anand Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra
"If you look at the broad contours of the Budget, it is very positive. The vocabulary was spot-on, giving priority to areas like agriculture and infrastructure. Almost by default, it begs the question what of implementation?
"But having said that, even there the vocabulary is good, as the progress of schemes is to be monitored. There is some disappointment on the absence of excise duty relief for the automobile industry."
Arun Firodia, Chairman, Kinetic Group
"The development of the rural economy will boost demand for two-wheelers. Prices of industrial raw materials have been increasing during the last one year. The reduction in customs duty on raw materials and components will help keep these prices in check.
"The Government resources going into the rural development, health and education sectors will result in economic development and growth."
Mr Yashovardhan Birla, Chairman, Yash Birla group
Keeping in mind political compulsions, the Finance Minister has balanced the Budget very well, with comprehensive rural development programmes. However, the labour law reforms have surprisingly been ignored.
The dream of making Mumbai the regional financial hub is taking shape; also the thought to make Indian Institute of Science, Bangalore comparable to leading international institutes like Oxford and Stanford is highly appreciated.
The Special Purpose Vehicle (SPV) for development of infrastructure and the cess on petroleum products exclusively for the development of highways is a positive step towards progress of the country.
The concession offered to the textile processors, which are considered to be a weak link in the textile industry, will help the industry take one more step towards international competitiveness.
Raman Madhok, Joint Managing Director and CEO, Jindal Iron and Steel Co
"If all the measures that he spoke of are put in place, it would definitely boost infrastructure growth. And if that happens, a lot more people from urban and rural areas will get involved, which is good.
"Raising the excise duty was not a good thing for steel. Take galvanised coils for example, it was taken down to eight per cent, then brought back to 12 per cent and now raised to 16 per cent. It will not be good for rural areas because that is where the product is consumed largely. On the other hand, lowering of duties on zinc by five per cent helps the galvanised business. Overall, the emphasis on infrastructure building should take steel consumption up."
Pradeep Shah, Chairman, Indasia Fund Advisors
"I think the focus seems to be on the distribution aspect of a fiscal exercise that means trying to help the poor with a thrust on agriculture, education and water supply. Good, but it would take a lot of monitoring and administration to achieve the objectives.
"The heart is in the right place, now they need to have the administration in the right place too. I hope they come out with a good measurement device, or else that expenditure won't achieve the desired results. On the direct, indirect, and corporate taxes he seems to have laboured a lot on very little. One misses the big picture approach there."
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