Finance Minister P Chidambaram announced a surge in government spending on Thursday in his Union Budget 2013, despite expectations of an austerity budget to shore up its finances, imposing new taxes on the rich and large companies to fund a dash for growth ahead of an election due by next year.
Finance Minister P Chidambaram announced a surge in government spending on Thursday in his Union Budget 2013, despite expectations of an austerity budget to shore up its finances, imposing new taxes on the rich and large companies to fund a dash for growth ahead of an election due by next year.
Here is what experts said on the Budget and its proposals:
Sunil Kant Munjal, Joint Managing Director, Hero MotoCorp Limited:
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"It's a workman like Budget, something that the country needs today. He's done a reasonable job and growth should come."
Malvinder Mohan Singh, Chairman, Fortis Healthcare Ltd:
"It is a good, balanced, pragmatic Budget and this is what India needs today. It will certainly help the economy grow at faster rate."
Keki M Mistry, VC and CEO, HDFC:
"It's a growth oriented, balanced and pragmatic Budget."
Nagaraj Kulkarni, South Asia Senior Rates Strategist, Standard Chartered Bank:
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"The market borrowing numbers are higher than out estimates, and it is negative for the market. There will be upward pressure on yields. However, interest rate cuts by the Reserve Bank of India need not be related to market borrowing. They will focus on the quality of the fiscal consolidation."
Shakti Satapathy, Fixed Income Strategist, AK Capital:
"Total expenditure for FY14 is higher than revised estimate for the current fiscal year. Fiscal prudence would now be dependent on the quality checks on the non-plan expenditure side, especially the subsidy front."
Rupa Rege Nitsure, Chief Economist, Bank of Baroda:
"He has made allotments for infrastructure, construction of warehouses; so as long as the spending is on account of capital expenditure, one need not view it negatively."
Madhav Dhar, Managing Partner, GTI Capital:
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"The budget has been underwhelming. I feel disappointed and my sentiments are echoed by the markets. The Sensex is down and gold is up and that's exactly what my sentiment is."
Adi Godrej, Chairman of Godrej Group:
Welcome containment in fiscal deficit. There was good emphasis on agriculture and science. We welcome Incentives in capital market. Tax administration reform is welcomed as it will improve tax perception of india. GST implementation wil lead to higher growth next year.
Naina Lal Kidwai, president of FICCI:
I think, the economic survey puts growth as an imp part of agenda. It is carried through in the budget.
Joginder Singh, President and Managing Director, Ford India
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"We welcome the focus on infrastructure development, social benefits for inclusive and sustainable growth in the country. The investment allowance to boost the manufacturing sector is a positive move. The automobile industry is a significant contributor to India's economy and future growth potential. We are disappointed that there is very little in the budget that will help boost consumer confidence and revive growth. It is a missed opportunity to introduce measures that would have revived industrial growth significantly. As we all know the automotive industry has been going through very challenging times, we are disappointed with the increase in the excise duty for SUVs."
Chanda Kochhar, Managing Director of ICICI Bank:
There were really two big priorities for the country today and this Budget has very comprehensively tried to address those two priorities -- fiscal consolidation, and bringing back investments. It is very heartening to see that we believe the fiscal deficit is going to be 5.2 per cent this year, and that gives us the confidence to target 4.8 per cent next year. Similarly, if you look at investments, if you look at th budget carefully, there is a lot of things that can spur investments.
First of all we are talking about increasing the plan expenditure, so let some push come from the government. Ofcourse, from the private sector side, investment allowance, I think that can be a big push to actually enable investments to come back. Then if you look at low-cost housing, there is additional benefit for people who borrow for low-cost houses, so in a way, an incentive for people to buy homes. If you at the various sectors - on coal, he has talked about private-public partnership, about imported pool pricing needs to be addressed; on roads, they are talking about various corridors; we will award new 3000 kms; for energy sector, an important point he has said is that we will move from profit-sharing to revenue-sharing, a small announcement, but which can help make a lot of impact in bringing back focus.
There is a lot here for us to look forward to as far as pushing investment is concerned...
We all tend to look at the Budget as one big cure for 12 months. I don't believe this is going to be the only announcement that is going to spur investments back into the country
P. Balendran, Vice President, General Motors India:
"The hike in excise duty is not on expected lines, specially when automobile industry continues to remain sluggish.
"Unless you see the fine print, you may not be able to know how much is going to be the impact. In auto industry, for the commercial vehicles, good (budget). From GM India perspective, the budget doesn't get more than out of 10 points."
H.M. Bharuka, Managing Director, Kansai Nerolac:
"There was nothing exciting in the budget but it's not a populist one which is good. What remains to be seen is how the own to 4.8 percent when planned expenditure has been increased by 30 percent and that I think is the most important part.
"The other bit is he has increased expenditure in rural markets so overall consumer spending should not be affected in the coming year. The consumer industry will also cheer the development on the GST front. The finance minister indicated that there has been some consensus that has emerged on the issue and that it will get passed in the near future.
Sunil Duggal, CEO, Dabur India:
"Rural stimuli has been continued which is good for the consumer sector. We are expecting the implementation of the goods and services tax from April 2014 and the finance minister indicated a positive build up to that which was good.
"Major issue for us will be to watch the impact this budget will have on inflation, which will have an impact on demand for us."
S. Sandilya, President, Society of Indian Automobile Manufacturers and chairman of Eicher Motors:
"Overall tax rates not having gone up ... is very good.
"However, on the SUVs, he increased excise duty, saying they occupy more parking spaces, which is totally surprising. We need to find out how it affects the overall sales. It was one area where growth was significant and yes, this will have an impact.
"Also on imported vehicles, he increased the customs duty which was expected."
Partha Iyengar, Country Manager - Research, India:
"The big overarching focus on growth by the FM is the fundamental 'feel good' factor in this budget. Given the fact that one can argue that a lot of the weakness in the Indian economy is what I call a 'sentimental recession', his strong statement that there is no grounds for 'doom and gloom' heading into the new year. The big specific positives of the budget are that he has focused both in terms of the letter and spirit of the budget on the key planks of growth for India and health of every industry, including IT, which is Infrastructure, Education, Skills Development, and incentives for the growth of domestic manufacturing. Some of the other positive areas are support for entrepreneurship, the MSME sector, both in terms of financial and overall support. The recognition that the overseas 'trust deficit' in terms of a comfort level on India's investment climate has to be addressed is also welcome.
"However, the budget is only a directional statement, and the challenge for India historically and even currently is in the execution of the statement of intent outlined in the budget. This has been India's Achilles' heel, in that bold pronouncements in the budget never see the light of day or are not implemented as effectively as they can or should be. So it was disappointing to not see any statements on what the government would do to ensure mechanisms/oversight to ensure speedy and efficient implementation of these programs."
Amitabh Chaudhry, MD&CEO, HDFC Life:
"This budget reflects a tight rope walk by the Finance Minister given that he has to bring back investor confidence, spur investment and growth as this might be the last full budget prior to general elections.
"The budget is a responsible and pragmatic one with announcement of several initiatives that should spur growth. A number of measures for financial and capital markets are a step in right direction.
"With respect to the life insurance sector, he has introduced several positive measures that would aid growth including a clear hope on passing of insurance and pension bills. Increase of surcharge (from 5 to 10 per cent) would result in a higher tax bill."
Aviation Sector, Amber Dubey - Partner and Head-Aviation at KPMG in India:
"It's been a disappointing budget for aviation. There were expectations of relief in ATF and MRO taxes; and funding support for regional airports. All dashed, except for a minor correction in the duty-free period for import of spares and test equipment for MRO. Aviation sector would continue to struggle till fundamental policy changes on the taxation front are brought in."
Hyundai Motors:
Disappointed that nothing has been done to spur demand for auto sector. We needed some stimulus which has not come. Sedan buyers who were switching to SUVs will now rethink. However, we are relieved no diesel tax was imposed.
With inputs from Reuters
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