"When the purse is in somebody else's hand, it is easy to say he should have opened it more," this is what R Gopalakrishnan, director of Tata Sons feels.
Gopalakrishnan further says that one has to be pragmatic about it. If the FM had demonstrated some aggressiveness in opening up his purse, he would have had people like the Pay Commissions and Unions and others waiting for their demands to be met, he says.
However, he could have done more, feels Gopalakrishnan. "If he could have given one or two examples of the expenditure on education, or health, people would have happily opened their purse strings to support that," he says.
"Our plan was to have 4% growth. Around January we said it will be 3.3% and come-Budget, we say it is 2.3%, I don't know what the final estimate will be. Agriculture and the nitti-gritties of what we can do about restoring growth to 4% was surely lacking in this Budget," Gopalakrishnan says.
However, Chairman of Godrej group Adi Godrej believes that the FM has not opened his purse strings as much as everybody wanted him to. "I think fiscal consolidation is extremely important. I think the economy is riding the boom because of the fiscal consolidation to a certain extent, and if we have to contain the interest rates and inflation, which to my mind are very important going forward. I think fiscal consolidation is an important part of that exercise," he says.
Godrej further says that the private sector is growing fast, especially the FMCG sector. Godrej believes that the FM has addressed many issues very successfully. For instance, he has reduced the excise duties on Food processing. "There were other aberrations in the FMCG sector, for example, import duty on industrial oil was higher than that of soap, and the FM has corrected it. Import duty on Vanaspati was much lower than the import duty on the raw materials. He has corrected that too. He has raised the import duty on Vanaspati, so many of the aberrations, which were affecting industrial development in some of these sectors, he has attended to and successfully changed," ends Godrej on a happy note.
CMD at HCC, Ajit Gulabchand says that lack of funding on infrastructure was not the only issue in this year's Budget. Gulabchand says that though the FM has increased expenditure on infrastructure, it is still a marginal increase. He says, "Although spending on infrastructure has increased to 4.3% of GDP vs 3.9% last year, it is only a marginal increase, compared to what China spends on infrastructure, which is 7% of GDP."
Gulabchand cites the example of Rakesh Mohan's Committee on NCAR, which had recommended that we should be spending about 8% of the GDP on infrastructure at this time of the decade. "Thus we missed the opportunity to signal that they are going to spend on infrastructure, though it was easily possible for the FM to spend about 5%."
This in turn, he adds, would give a signal that the FM would increase it to 8% in the next two-three years and it would have been possible even considering the budgetary constraints and fundamentals of the Indian economy.
On the issue of fiscal deficit, Gulabchand says that Chidambaram could have made a trade-off between control on fiscal deficit and giving rise to growth. He says, "Fiscal deficit control is very important but when it comes to investing in capital assets, which infrastructure does and therefore gives rise to another growth in economy, you can make a trade-off here."
Sumeet Sinha at AV Birla Group is unsure whether Finance Minister P Chidambaram could have done something more for growth or not, because he feels, that with a limited amount in the kitty, certain bets have to be taken.
Sinha says that seeing the FM's moves with respect to political issues and also his own desires and beliefs, he believes the FM would rather pump growth in the agricultural sector. Therefore, Sinha adds, "Most of the 20-30% increases have actually been in the rural areas, and issues pertaining to those sectors."
This is why, Sinha specifies, the belief is that this plays well with the political constituency. Although he feels it has some economic fundamental behind it, which is that the demand in those areas will lead to consumption in growth, that will then feed into overall economic growth. Apart from this, Sinha feels another route would have been to have the Budget infrastructure-oriented and then feeding that into the overall productivity of the economy.
President of the Auto sector Pawan Goenka was expecting to see more focus on infrastructure growth, which was given a miss in this Budget. "We were hoping to see something more on R&D and long-term investments in the industry," he says.
Goenka further says that his expectation was excise reduction, but it was taken care of only in some segments and other segments were left out. "It creates an artificial market barrier to a certain class of vehicles, which we were not expecting as an industry. Our request was that whatever happens should happen across the board and not for one segment of the vehicles," he says.