Budget: Who praised FM, who blasted him

Home Minister P Chidamabaram has welcomed the allocation of Rs 30,000 crore (Rs 300 billion) for police in the Union Budget, calling the annual exercise a balanced effort marked by a mature assessment of the state of the economy.

Commending the Finance Minister for "generous allocation" for flagship social schemes, Chidambaram said the centrepiece of the budget is the aam aadmi.

"The Finance Minister Pranab Mukherjee's budget for 2010-11 is a very balanced effort marked by a mature assessment of the state of the economy and of the measures required to sustain high and inclusive growth," he said.

The Home Minister said allocation of Rs 30,000 crore in revenue and capital accounts is about the same level as the actual expenditure incurred in 2009-10 and, if wisely spent, should be able to cater to the needs of security.

"Of the above, assistance to states for modernisation of police force has been pegged at Rs 1,975 crore (Rs 19.75 billion), a modest increase of Rs 130 crore (Rs 1.3 billion) over the actual expenditure that will be incurred in 2009-10.

However, I am confident that, if necessary, we can find additional resources through re-appropriation or through supplementaries," he pointed out.

Police has been provided Rs 2,805 crore (Rs 28.05 billion), the same level as the estimated actual expenditure in 2009-10, he said.

"Dada and Didi have failed the people." This was how RJD chief Lalu Prasad vented his ire against the general and railway budgets in his inimitable style. "Dada and Didi have failed the people.

Both are concerned only about West Bengal. The county had seen Didi a few days back. Today it also saw Dada. "Both are only concerned about Kolkata (West Bengal).

They did not do anything for Bihar, which was neglected in both budgets," the former Railway Minister, whose party also staged a walkout in protest against proposed duties related to petroleum products, told reporters outside Parliament.

Prasad said a "government which cannot check price is incompetent and an incompetent government has to be changed."

Prasad, whose party is extending outside support to the government, said that the government did not take any political party into confidence before presenting the budget.

Asked why he is opposing the proposals of a government which he is supporting from outside, Prasad said: "What do I do. They are increasing prices." He claimed that the entire opposition is united on the issue. "We have no trust on the Congress government and we will jointly protest," he said.

Terming this year's Union Budget as a "price-rise budget", the CPI (M)-led LDF government in Kerala said the hike in customs duty on petroleum products and excise duty on non-petroleum products would lead to increase in prices of all commodities.

"There is nothing in the budget to check price rise. The plan to mobilise Rs 46,000 crore (Rs 460 billion) by increasing excise duty by two per cent on items mainly consumed by the common man will only result in a spurt in prices of essential commodities," Kerala Finance Minister T M Thomas Issac said in his reaction to the budget proposals.

Stating that the Centre had once again proved that it is "subservient" towards corporate houses by not levying any new taxes, he said the proposal to provide Rs 26,000 crore (Rs 260 billion) direct tax concession would only help them.

As far as Kerala was concerned, the budget proposals were very "disappointing" and total revenue allocation to the state from the Centre would be less, the minister said. Isaac said that unless the Centre provides more resources to states, it would be difficult to bring down the fiscal deficit.

He also criticised the proposal to mobilise Rs 25,000 crore (Rs 250 billion) by disinvestment of Public Sector Undertakings and said the Centre was all set to "hand over" them to corporate giants.

The 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 per cent to 18 per cent.

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 per cent, 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."

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 per cent 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.

Steel maker, SAIL, said the hike in excise tax rate would add to the inflationary pressure in the economy. "With two per cent increase in tax, steel prices in the country might go up by Rs 600 per tonne. There is also an increase in the prices of fuels in the country. All this will add a pressure to the inflation in the country," SAIL Chairman S K Roongta said.

Marico CMD Harsh P Mariwala said the industry was not expecting any goodies but it is very happy to get them.

"Increased outlay for rural development, agriculture and social sector, and decrease in personal income tax slab will help increase consumption, which is very good for FMCG firms."

FMCG major Dabur India said the best part of the Budget is the raising of income tax slabs and the marginal hike in exemption limit. "These measures will result in higher disposable income in the hands of the masses, which would, in turn, fuel demand for consumer products and mitigate the expected impact of rising food Inflation," Dabur India CEO Sunil Duggal said.

Conglomerate ITC said it was examining the impact of excise duty hike on costs. "It is an extremely steep increase. We are evaluating the impact on costs," ITC spokesman Najib Arif said. Asked if ITC would hike prices of cigarettes due to the excise hike, he said that a decision would be taken after analysing the impact on costs.

Tamil Nadu Chief Minister and DMK president M Karunanidhi on Friday lauded the Union Budget presented by Finance Minister Pranab Mukherjee, saying it guaranteed social justice and economic development.

"I commend him for giving priority to education, people's welfare and infrastructure," Karunanidhi, whose party DMK is a key constituent of the ruling UPA, said in an official statement here. Thanking Prime Minister and Finance Minister for announcing one-time grant of Rs 200 crore (Rs 2 billion) to Tirupur textile cluster "in response to our request," Karunanidhi also welcomed various sops announced for farmers, including loans.

The chief minister also welcomed the change in the income tax slabs, saying it would help the middle class.

Financial sector experts, in their initial reactions to the Budget have described it as a 'positive and pragmatic' one.

The Sensex zoomed over 350 points backed by strong technicals and a friendly budget which focused on maintaining growth and reducing fiscal deficit.

"The budget is a big positive in terms of controlling fiscal deficit--from 5.5 per cent to 4.8 per cent to 4.1 per cent. Besides, the market also found positive the government's net borrowing target of Rs 3,45,000-crore (gross Rs 4,50,000-crore)," banker and financial sector expert, Uday Kotak, said.

The goverment's borrowing programme is in line with market expectations, he said, adding that the budget has also been "very, very benign on taxes."

The government's borrowing programme is in line with market expectations, he added.

Enam Group's Chairman, Vallabh Bhansali, said that the Government's announcement that banking licences would be considered for NBFCs and the private sector, is "a big announcement and very welcome."

"It is a very balanced budget with a spirit of pragmatism and boldness," he said.

IDBI Fortis Life Insurance's managing director & CEO, G V Nageswara Rao, said that for most people, the budget should be net positive.

"The finance minister has reduced the income-tax burden on the middle-class significantly by increasing the slab limits for lower tax brackets. Additional tax deduction has been introduced for investment in infrastructure bonds," Rao said.

However, there would be a general increase in prices of all manufactured goods because of increase in excise duty on goods as well as petrol and diesel. "So one hand gives, while the other takes it away, but for most people it should be net positive," Rao said.

The government's focus on expenditure management was very welcome, he said.

"Control over fiscal deficit comes more from containing expenditure. Even more commendable is making the deficit more transparent by not issuing oil or fertilizer bonds," Rao said.

Hailing the budget proposals, the Congress on Friday said Finance Minister Pranab Mukherjee has finely balanced key economic parameters, including consolidation of recovery, creation of infrastructure and boosting revenue collection.

"It is a Budget of 4 Cs - consolidation of recovery, cushioning of social vulnerability, creation of infrastructure and collection of revenue," party spokesman Manish Tewari told PTI.

He described Opposition walkout as a "constitutional slur" and violation of the Parliamentary tradition and propriety". Senior leader and Parliamentary Affairs Minister Pawan Kumar Bansal said that this was a development oriented budget.

"This is a development oriented budget, furthering inclusive growth. This is for bettering the lives of the common man," he said. Bansal said that there was something for every sector in the budget with education, health, social schemes and infrastructure and others getting priority.

The Parliamentary Affairs minister lamented the Opposition boycott of the Budget speech. "They walked out even as the Finance Minister was announcing a slew of schemes and incentives," Bansal said.