Budget jury: A good show

India Inc believes that given the current economic slowdown, the Budget could not have been any better.

Kumar Birla
Chairman, Aditya Birla Group

The Budget presented much of what I expected. Coming on the back of the Interim Budget, it signals continuation and stability, which are very important for a climate conducive to growth.

Its biggest positive is the absolutely desirable trust on inclusive growth. In that sense, it is a Budget for Bharat.

On the expectations side, disinvestment needed an accelerated road map. Importantly, one feels that there should have been a substantial allocation for internal security -- which is missing. I believe more clarity on this aspect would emerge soon.

Current fiscal deficit is a cause for concern, but the FM has his compulsions. On the whole, he has made the right connect. My overall take is that the Budget is a sort of vision document at a macro-level.

*****

Sunil Mittal
Chairman, Bharti Group

This is a good Budget considering the current global economic situation and the government's immediate priority of sustaining the growth momentum.

Increased outlays for infrastructure such as highways and power plants come as a very positive development as these projects have a strong multiplier effect.

Demand growth in rural areas has been one of the bright spots of the economy.

The removal of fringe benefit tax (FBT) will make the system less complicated and the government's road map for the introduction of goods and services tax (GST) by April 2010 is also a step in the right direction.

One area where the finance minister fell short of expectations is the disinvestment programme, where there is a lack of bold targets.

*****

Kris Gopalakrishnan
CEO, Infosys

Under the prevailing circumstances, we can term this as a good Budget. However, from the IT industry perspective, this is a mixed bag. The extension of Section 10A/10B exemptions by one more year is a positive statement even though the impact will be limited.

The proposal for exemption of excise duty on packaged software will have a positive impact on the industry, especially during this recessionary phase.

The government's focus on increased investment in e-governance projects is encouraging and it will help the domestic IT services industry.

The proposal to set up a dispute resolution mechanism for handling issues relating to transfer pricing or international taxes will help the IT sector, which is more export-oriented.

*****

A M Naik
CMD, L&T

In view of the exceptional times, the finance minister (FM) has presented a balanced Budget. Through a combination of measures, he has tried to address issues of both consumption and investment to maintain a stable growth rate.

A reform push can be clearly seen in some aspects of the Budget. The proposed GST rollout has not been postponed but is expected to be effective from April 1, 2010. The Budget, thankfully, did not revert to the levels of taxes, both excise and service, that were applicable before the stimulus packages were implemented.

The FM has recognised infrastructure as a key area of focus and has raised allocations for certain sectors. He has committed that infrastructure spending will rise to 9 per cent of the GDP by 2013-14.

*****

Kishore Biyani
Chairman, Future Group

I believe that the impact of the huge increase in government spending can spur growth and drive domestic consumption in a big way.

Till now, most of the domestic consumption demand was based out of big cities with the top-eight cities accounting for almost 40 per cent of the total demand. Household saving in India is among the highest in the world.

This Budget proposal of increased spending on rural India could boost private consumption in the countryside. Consumers in small towns and villages will have more money to spend on consuming value-added products. This can bring about a paradigm shift in the Indian economy.

So, increased consumption in rural India will create new markets and jobs.

*****

Rakesh Jhunjhunwala
Partner, Rare Enterprises

Since this was the first Budget of a newly-elected government not hamstrung by Left parties, it was expected that it would present some kind of a road map for reforms.

However, no big measures have been articulated. While the market did not doubt that reforms would be carried out, it was expecting some hints on what it could be.

With regard to disinvestment too, the market appreciates the fact that the government needs time on this, but the Budget could have talked about it. The kind of boldness that is needed for reforms is somehow missing. That's not to say that reforms won't take place.

But the Budget doesn't say so explicitly and that has disappointed the market. On the taxation front, there are some good proposals for both companies and individuals.

*****

Chanda Kochhar
MD & CEO, ICICI Bank

The growth target of 9 per cent is clearly a positive signal, given the backdrop of weak macroeconomic conditions globally.

The Budget seeks to provide a contra-cyclical fiscal stimulus to facilitate this growth. The emphasis on infrastructure and rural development will help improve productivity and prosperity.

Actual development and implementation of projects will now have to take place through the PPP model. The Budget also signals a move towards tax reforms with measures towards simplifying taxes, increasing tax compliance and widening the tax base.

It has left corporate income tax rates unchanged and given some relief to individual taxpayers. These steps would be positive for personal consumption as well as investment activity.

*****

Sanjay Nayar
CEO & Country Head, KKR

THE emphasis on key areas such as infrastructure, education, agriculture and rural consumption is welcome. This will provide the basis for sustained economic growth through an impetus to consumption and, to some extent, the supply side.

There haven't been any significant changes in direct taxation other than the removal of fringe benefit tax (FBT) and increase in minimum alternate tax (MAT).

It would have been a strong positive to see a statement of intent from the government with regard to a few key areas such as addressing the fiscal situation, which is under pressure. Overall, the Budget is a realistic but narrow statement with few specifics on critical supply side themes.

*****

Pawan Munjal
MD, Hero Honda

This is an inclusive, growth-oriented Budget. This is a Budget that has invested in creation of both social and physical infrastructure by substantially raising allocations for key flagship programmes such as the National Rural Employment Guarantee Scheme (NREGS), Bharat Nirman and the rural roads programme.

But there will likely be a cost to these spendings and, therefore, the government will have to look at alternative sources of revenue if it wants to keep inflation, market borrowings, interest rates and fiscal deficit under control.

A time-frame for goods and services tax (GST), maintaining status quo on excise, removal of fringe benefit tax (FBT), withdrawal of surcharge in the case of direct taxes for individuals are laudable moves.

*****

Kalpana Morparia
CEO, J P Morgan Chase India

The finance minister has set the goal of bringing India back on the 9 per cent economic growth track and, to support this, he has continued with the government's stance of providing fiscal support to ensure a durable economic recovery.

An overall increase of 37 per cent in the Plan expenditure augurs well for infrastructure development and economic growth. An elevated spending and, consequently, a higher fiscal deficit (60 basis points higher than that announced in the Interim Budget) appear justified over the short term as recovery of the economy is still nascent and needs support.

The withdrawal of surcharge on income tax could increase personal incomes by up to 3 per cent and help boost consumption further. The withdrawal of fringe benefit tax (FBT) should alleviate procedural irritants for companies.