Union Budget 2013-14: Thodi Khushi, Jyaada Gham

The Finance Minister P Chidambaram’s Budget for the financial Year 2013-14 has evoked mixed reactions from India Inc. As expected they range from – an overall good Budget to disappointment in some sections and industries. While it can be said that a Budget exercise for a developing economy like India is always a tough exercise, the FM cannot please all. He has to do a tight rope walking. After all what is Budget, you please some at the cost of disappointing some. If he gives relief to a sector or common man by reducing some taxes or duties he has to do a balancing act by taxing or imposing a higher incidence on the other. What will be keenly watched is how the government achieves its target of containing fiscal deficit to 4.80 per cent from the current 5.20 per cent. Also the various allocations to boost infrastructure will be observed intensely.

So how was the Budget/ Present herewith is the views and reactions of head honchos of corporate India and associations.

Jaiprakash Desai, CEO, Metro Shoes

The Budget is disappointing for the footwear industry. We were expecting parity to the industry at par with comparable industries, at least in the excise duty. The proposal to charge higher surcharge on domestic companies whose taxable income exceeds Rs. 10 crores is like penalizing the efficiency.

T.R. Bajalia, Dy. MD, SIDBI

The Union Budget 2013-14 embodies strong features of promoting investment and putting the economy on the high growth path leading to inclusive and sustainable development. With a view to giving boost to small and medium enterprises, some of the benefits extended through the sector include: Enhancing the refinancing capability of SIDBI from the current level of `5,000 crores to ` 10,000 crores per year. This is helpful in providing credit facilities at affordable rate by SIDBI to micro, and small enterprises through banks and SFCs. This will benefit over 3.5 lakhs MSEs. The Budget is quite progressive for the growth of MSME sector.

Ashish Dikshit, President, Madura Fashion & Lifestyle

The apparel & textile industry has witnessed a significant slowdown in the last 2 years due to combined impact of inflation & excise duty. The new excise regime proposed in this budget would significantly ease the cost pressures in the industry. It should also bring cheer to consumers and encourage greater consumer spending through stabilization of prices in the category.

Mohammad Chowdhury, Leader Telecom, PwC India

Of the Rs 40,000 crores revenue expectation from the industry, we feel confident that at least Rs 20,000 crores can be expected from license fees, and it is conceivable that the Government could raise around Rs 10,000 crores from spectrum extensions and renewals.  However, we are unclear as to how much could be raised from auctions of fresh blocks of spectrum, so in our view around Rs 10,000 crores of the Government's revenue objectives may be at risk.

Prithviraj Kothari, MD, RiddiSiddhi Bullions

Overall it’s a good budget with no major changes. Though CTT has been introduced I don't think it will pose a major impact for the bullion industry. It’s good that the government has not imposed any restrictions or any further duty hike on bullion. On the whole it has been a satisfactory budget.

Gaurav Gupta, Senior Director, Deloitte, India

While we will wait to see the fine print, the budget proposed increased rural spend that should further increase the rural demand for Consumer Business (CB) companies. In the current FY while growth rate slowed slightly there was no adverse pressure on bottomline as commodity prices had remained soft. However, with increase in surcharge and fee on royalties, both Indian and MNC firms will look at ways to mitigate this impact, especially if the commodity prices start firming up. Food subsidy will be a tricky area as while it will increase demand, it will also lead to higher inflation. Investment allowance for manufacturing expansion should prompt companies to look at expanding capacities which will be good for the longer term Overall the budget seems to be neutral for CB companies with drivers for increasing rural demand but added pressure on bottomline due to increase in surcharge and taxes”

Tarun Katial, CEO, Reliance Broadcast Network

The budget brings good news for the radio industry, with phase III poised to create optimal reach for the medium. Other benefits like news, networking, current affairs and sports, multiple frequencies etc. will add the necessary fillip to further fuel listenership growth through reach and content diversification and will also drive profitability and revenue through cost optimization. With deeper penetration, radio can play a key role as a catalyst of social transformation through partnership for CSR initiatives, social causes and Government initiatives, as it reaches where no other medium can because of literacy and cost issues. With expansion to 300+ cities, it stands to reach 90 per cent of the Indian population, making it truly, a common man’s medium.

Anirudh Dhoot; President, CEAMA & Director, Videocon.

The FM has a given balanced Budget and kept the basic tax structure unchanged except increase of surcharge in some cases. Focus is given to infrastructure and development of science and technology. As far as electronics industry is concerned, it’s encouraging to promote set top box manufacturing by increasing import duty from 5 per cent to 10 per cent and to boost local manufacturing of high tech electronic products in India. Excise Duty on mobile phone above Rs. 2,000 raised from one to six percentage. So mid and high end mobile phone will get costlier. Further if an MSME grows into a larger enterprise, benefits or preferences will continue up to three years after its growth and this will give incentives to MSME to grow to their potential. Overall, the budget is positive for the Consumer Durables & Electronics Industry.

Seshagiri Rao, Jt MD & CFO, JSW Steel.

The budget, with the limited availability of fiscal space, attempted to bring fiscal consolidation with lower fiscal deficit of 4.8 per cent and simultaneously made higher allocations to various schemes to spur investments. Announcing 15 per cent incentive for acquisition and installation of new plant and machinery by manufacturing companies during the period beginning from 1st April 2013 and ending 31st March 2015 is a welcome step to boost the investment.    Higher allocation of 29.4 per cent towards plan expenditure and increased outlays for social infrastructure, education, rural development, health and urban development are also expected to stimulate economic activity. As most of the projects are stalled due to regulatory and bureaucratic delays, the  expectations from the budget to ease the  process of clearances is not met since the effectiveness of  Cabinet Committee  on Investment is yet to be  established.   It is a matter of concern that the total   non-plan revenue expenditure particularly interest payment and subsidy remain at elevated levels.  It is also challenging to achieve an increase of 19 per cent in tax revenues when the economy is slowing down and there are no immediate signs of recovery. However, lower fiscal deficit, announcement of introduction of DTC bill in this budget session and possible GST rollout are encouraging take outs from this budget.

Babu Rao, President, Association of Indian Forging Industry (AIFI)

The Budget proposals of the FM for 2013-14 do not seem to address the slow-down in the manufacturing industry more specifically the Auto-sector on which the Forging Industry depends to a large extent. The investment allowance of 15 per cent announced by the FM will help only the larger industries with outlays of over Rs 100 crores. The majority of the members of the AIFI who are SMEs will not be able to avail of this. The FM should reconsider and extend it to the entire industry to give the much needed stimulus to manufacturing. The welcome measures for the SME Sector are the increase in SIDBI Fund from Rs 5,000 crores to Rs 10,000 crores and the Rs 500 crores credit guarantee scheme besides sops for loans up to Rs 25 lakhs

Ravi Kiran, Co-founder, VentureNursery, India’s first Angel backed accelerator

Investment in TBI to qualify as CSR investment is welcome. The move to allow investment in Technology Business Incubators to qualify as CSR investment is a good start and good for tech incubators. Hope it comes with a mechanism to establish accountability of such investments.
The Government needs to recognize private accelerators’  role in the entrepreneurial ecosystem as well. Continuation of non-tax benefits 3 years after the Micro, Small and Medium Enterprises move to next level is welcome, even though the exact impact will need be assessed. I would also have liked to see reforms in the way we define MSMEs today as it is fundamentally flawed in today's context. Alternative Investment Funds getting pass through benefit needs to make a distinction between pooled angel investment versus individual investment.

R Venkataraman, Managing Director, India Infoline

Given the fact that elections are just round the corner and the grim macro-economic scenario, the FM has done a fairly commendable job. He has resisted the temptation to announce a populist budget. The good part is that the government finances have not gone out of control and all the necessary steps have been taken in terms of fiscal responsibility. Tax reforms in form of DTC and GST, proposed passing of the insurance and pension bill are steps in the right direction. This shows that reforms are still on the FM’s agenda. Acknowledging the role of FII, FDI and ECB inflows to bridge the current account deficit shows the FM’s practical nature.  Reduction of STT for equities and introduction of CTT was on expected lines. Realizing the importance of capex cycle to kick-start the economy, positive steps like approving 3,000 kms of roads, coal price pooling, investment allowance etc have been announced. Overall a practical budget.

Amar Ambani, Head of Research, India Infoline

The FM presented a rather non-eventful budget given that fiscal deficit targets were vocally communicated earlier. Market was disappointed with evident populism in the budget through higher social scheme allocations despite limited headroom. The math for achieving 4.8 per cent fiscal deficit in FY14 looks vulnerable to slippage. Further, it was also not a budget which can revive the sagging economy. Absence of key reform measures such as GST implementation was also dejecting.

Vinita Bali, MD Britannia Industries

Overall, the FM has presented a responsible budget. The focus on reducing the fiscal deficit is critical & others like the commitment to GST implementation are a step in the right direction. The imperative, however, is timely implementation of all proposals.

Devanshu Gandhi, MD, Vadilal

The FM has taken a careful approach towards fiscal prudence which is expected to bring positive results for the economy. More of a realistic budget, it could be good for capital markets & investments. One of the most encouraging facets of this budget is the focus on sustainable growth of infrastructure with the development of MSMEs and crucial sectors like oil & gas, power and coal. Indian manufacturers can rejoice with investment allowance of 15 per cent on investments of Rs. 100 crores or more in plant and machinery.  However, a few incentives for the Food & Beverage Sector as well as some boost for rural infrastructure would have made budget 2013 very cheerful for the food and retail sectors.

Kiran Murthi, CEO, getitBazaar.com

Small and Medium Sector Enterprises are dependent upon banks and financial institutions for their capital requirements. The move by the FM to enhance the refinancing capability of SIDBI from the current level of 5,000 crores to 10,000 crores per year is likely to encourage new entrepreneurs to set up their own businesses. This move will also result into generation of more employment opportunities. Implementation of the comprehensive GST is still under consideration stage. This needs to be operationalized soon.

Harkirat Singh, MD, Woodland

As a part of the Indian retail sector we feel that the budget 2013 will have a positive impact on the industry, the exemption of excise duty from readymade garments was expected. Additionally, the reduction in customs duty for Plant & Machinery for leather & footwear industry is a pleasant surprise and will lead to the reduction in cost of production and this marginal reduction will give a boost to the industry. It is a good budget that is welcomed by the industry.

Uday Shankar, Chairman FICCI Media & Entertainment committee

FICCI expresses its shock at the proposed doubling of customs duty on the import of STBs to 10 per cent from the existing rate of 5 per cent, announced by the FM.  FICCI strongly believes that an increase in import duties on set top boxes will be detrimental to the government's digitalization programme that was flagged off last year. This move at this stage will hamper the progress of digitalization since it will significantly increase the outlays of the cable and DTH community. It will also adversely impact the government's tax collections from additional revenues linked to faster digitalization.

Dr. Satya Gupta, Chairman, India Electronics and Semiconductor Association (IESA)

We believe the steps outlined for this sector by the  FM will help to boost this sector by attracting investments, promoting entrepreneurship and domestic manufacturing,      About the investment allowance of 15 per cent in addition to the current depreciation benefits, the IESA believes this will significantly aid in attracting investments into this sector. About the import duty on STBs, the IESA welcomes the increase in import duty on this product, which is one the fastest moving electronics products today.

There is a potential for  100 million STBs over the next 2-3 years as a result of the digitization.

Peeyush Naidu, Director, Deloitte Touche Tohmatsu India

Airport sector investments over the 12th Plan period are projected at over Rs 60,000 crores with a bulk of the investments being targeted from private sector. The budget has proposed certain measures to promote mobilization of funds for infrastructure sector in general that could also facilitate investments in the airport sector.  Specific to the aviation sector, the budget proposes to provide certain concessions to the industry which is a welcome step given the potential opportunity.

Dr. Pervez Ahmed, Lead Director and Vice-Chairman, Saket City Hospital

FM has taken a commendable step by allocating funds for training and education and thereby laying thrust on capacity building. However, steps towards delivering broad access to health services by improving quality of care and reducing costs seem to be completely missing.  Budget did not bring up the issues pertaining to inter-state problems thriving in the country. Also there were no discussions in context to VAT and duty on goods like medical equipments. Coming to national health insurance plan, there should have been some articulations or provisions in the budget to encourage PPP thereby ensuring more investments to deal with current issues like low coverage area, quality of services and low capacity in monitoring and evaluation.

Dr. Mahesh Inder Veer Singh, C.E.O, Saket City Hospital

The Union Budget presented by FM has been fairly balanced touching upon all key areas like infrastructure, education and women and child welfare. However, it  has not brought much respite to general public, hospitals, pharmaceutical companies and to the medical products and diagnostic companies.  24.5 per cent increase over RE in the new national health mission around training and education, Rs 1650 crores for setting up six AIIMS-like institutes, Rs 1,069 crores for the department of AYUSH will contribute to building capacity of the healthcare sector. However, these fund allocations will not have a significant role to play in improving healthcare delivery. The budget does not bring any clarity on the investment in research and technology, tax holiday/reforms to bring down the overall cost of healthcare for the people of India. Also the biggest wish of granting infrastructure status to the healthcare sector has not been fulfilled.

Ambarish Gupta, CEO, Knowlarity Communication 

SME’s are clamoring for a reduction in MAT. Right now SME’s in SEZ have to pay a MAT (Minimum Alternative Tax). Doing away with this tax will spur productivity and increase employee generation by many fold. Basically the industry wants a simpler tax structure and lesser barriers to entry. Budget 2013 will try to address this issue. On a positive note Budget 2013 has provided more incentive to chip makers by reducing duty on imported machinery needed for manufacturing chips. This is going to boost manufacturing and create more jobs. Also more funds are now available for startups thanks to the initiative taken by the Finance Ministry to recognize certain funding to institutions like IIT as part of CSR activity. This is going to release more funds for startups.
Overall this is a growth oriented budget.

Deepak Kaistha, Managing Partner, Planman Consulting 

With our FM pointing towards the imperative need of foreign investment in India, HR companies are likely to get an increment in terms of more hiring, more work. The budget also hints at increased focus on providing education and skills to youth for securing jobs in the 2013-14. Among this, the focuses will be on enhancing the ability of the undereducated and unskilled to become self-employed and find meaningful work. Furthermore, with a growth rate of 9 per cent and an outstanding growth in sectors like manufacturing, IT and ITES, textile, agriculture, construction, and retail, there arise tremendous job opportunities.

Premlesh Machama, MD, CareerBuilder India

The fiscal deficit for the current financial year has been curtailed at 5.2 per cent of the Gross Domestic Product (GDP). This is lower than the estimated fiscal deficit target of 5.3 per cent. The fiscal deficit target for the coming financial year was announced at an anticipated 4.85 per cent of the GDP. The FM has also given a the big push to infrastructure development, promising long-term debt funds and quick action on new major ports, series of highways, quick approvals to oil and gas blocks, etc. He has also clearly communicated that the government will do everything to make its policies encourage investment and make the environment business friendly. Both these factors will lead to higher economic activity and subsequently creation of more jobs.

S. Sandilya, President, SIAM

The announcement of investment allowance reintroduction is very positive. Focus on infrastructure is also a welcome move which will help growth of the economy. While there are several innovative proposals, the auto industry had expected that the FM would come out with more specific roadmap for implementation of Goods & Services Tax (GST). The industry would be keenly looking forward to full implementation of GST at the earliest.

With a view to deteriorating market sentiments, SIAM had also recommended reduction of excise duty for passenger cars by 2 per cent which could have led to significant improvement in sales.
However, the FM has accepted SIAM’s recommendation on extension of concession for import of electric and hybrid electric vehicle parts till 31st March 2015.

The increase in customs duty for luxury cars and motorbikes seems to be an effort to raise more revenue and to encourage local manufacturing, value addition and employment. The proposal to increase duty on second hand vehicle from 100 per cent to 125 per cent is the right step. It clearly conveys that India is not ready to accept second hand old vehicles from other countries.

Sushil Karwa, MD, Krishidhan Seeds

The FM has announced allocation of Rs 500 crores to start a program in crop diversification and promote technological innovation along with Rs 3,415 crores for agri-research.  These provisions are very encouraging for the core players of agriculture and biotech sector as it would help us to focus more on research and development. Since private sector is playing a leading role in biotech and agri sector, we hope that government would channelise some funds in private sectors in the form of grants and / or soft loans so as to encourage the sector. It would also motivate us to stress on developing innovative disease resistant and drought resistant seeds to deliver value added quality products that ensure higher yields at lower cost to farmers.

Hari Bhartia, Co-chairman & MD, Jubilant Life Sciences

Overall, it is a good  Budget which aims to bring focus back on growth & also presents an honest effort to address the  fiscal deficit management .  A number of initiatives especially on infrastructure including investment allowance, increased focus on social sector, education, skills, financial sector, agriculture, rural economy would fuel growth.

Vinod Hayagriv, Immediate Past  Chairman & Legal Committee Chairman of  the All India Gems & Jewellery Trade Federation

We commend the FM for understanding the needs of gems & jewellery sector by not raising any taxes and levies. The gems & jewellery sector has contributed positively to the government needs to contain the balance of Trade/ CAD burden. We pro-actively suggest that the custom duty maintained at 6 per cent till such time the CAD positions improve. gems and jewellery sector will progress towards organization and compliances.

Ramana Akula CFO, Pearson India

It is  overall a positive budget from the education sector standpoint – despite the expenditure management exercise the government has increased allocation to the education sector by 17 per cent. The education cess of 3 per cent has been retained for the financial year 2013-14; this move will continue to promote the public spending in various education schemes like Sarva Shiksha Abhiyan. However, some expectations such as extension of tax sops provided to vocational education in agri sector to other streams of vocational education have not been met.

Dinesh Agarwal, Founder & CEO, IndiaMART.com

The current budget definitely a positive one for the MSME community. By increase the budgetary support for SIDBI (Small Industries Development Bank of India) for Micro Finance Equity Fund by 100 crores,  the FM has ensured that the financing needs of MSMEs are taken into consideration and they are able to growth at an optimum pace.

Dr. Dr Sanjeev K Chaudhry, MD, SRL Diagnostics

Considering the fact that private sector serves 75 per cent of the healthcare diagnostics responsibility for the country, the Union Budget has yet gain missed the opportunity to recognize the stellar role of the private sector both in terms of providing high quality affordable services and geographic reach. The long standing industry demands for providing fiscal relief for consumables and tax incentives for accreditation have yet been given amiss.

Deepak Kapoor, Chairman, PwC India

This budget is clearly a response to the prevailing socio-economic circumstances in the country. The FM has put forward a peoples’ budget. The most reassuring aspect of the budget today is the FM's acknowledgement of the criticality of continued inflow of foreign investments for augmenting the country's growth. The focus is clearly on the imperative of maintaining a healthy environment to mobilise it. The FM has also done well to place continued emphasis on the infrastructure sector, particularly, social infrastructure, which is really the need of the hour.

Prashant Pandey, CEO, ENIL

We are happy that the FM announced the immanent launch of phase II of radio expansion. With this, we hope all hurdles to the launch of phase III are now removed. We hope quick action follows this announcement.