B Santhanam, president, Flat Glass, South Asia, and the managing director of Saint Gobain Glass India Ltd, spoke to rediff.com soon after the presentation of the Budget by the Finance Minister P Chidambaram.
Santhanam, who was also the vice chairman of CII, Tamil Nadu State Council, and a member of the CII Governing Council for Industry-Institute Interface, is neither happy nor sad about this realistic Budget. In 2004, The Indian Institute of Madras conferred upon him the Distinguished Alumni Award. Excerpts:
What is your first reaction to the Budget?
It is on the expected lines. The good thing about this Budget is that it was predictable. It is a good thing that the government does what is predictable. Budget presentation is not an exceptional event any more. There are not many surprises. Except in a few countries, the Budget hardly elicits any response globally. In India, however, Budgets have become a huge event.
You said the Budget was on the expected lines. You say so because it stresses on agriculture?
Lot has been written about agriculture being in distress, and it is so. There are several reasons for it. Core productivity was declining. Whatever we did in the 60s and the 70s was not yielding marginal returns. In fact, it was on the negative. Therefore, agricultural sector had to find a new way. But I am afraid we are doing more of the same. Often, when you do more of the same and expect dramatically different results, you get a bit more of what you got, nothing significant.
In agriculture, lack of emphasis on soil management, modern techniques for ploughing, micro nutrients and such things are a bit of cause for concern.
Last year when we spoke after the Budget presentation, you expressed your concern over neglecting education. Are you happy now?
Yes. Last year, there was a small allocation for education. Now, skill development is becoming a reality. Skill mission is a positive step by the Planning Commission. Money allocated to do the study is a welcome approach.
I am happy that emphasis on vocational education has come a big way. We did something on vocational education in the 50s and the 60s. For more than 30 years, we lived on that investment.
Do you expect private-public partnership in vocational education?
I see that happening slowly. If the first 100 ITIs become centres of excellence because of public-private partnership, those 100 Indian Technical Institutes can become models for the next 1000 ITIs. What we have to do is, make sure that these 100 ITIs flourish well. Then, we have a very good chance.
Industry has always been complaining about lack of trained man power.
I think the ITIs addresses that compliant.
Inflation is a major issue in India now. Is this Budget inflationary?
I don't think anything in the Budget is going to contain inflation. In fact, on the construction industry, there is going to be inflation because of the increase in cement price. What is going to be passed on to the customers according to my estimate is Rs1500 crore (Rs 15 billion) which is a fairly large sum.
That will have the inflation spiralling.
Yes, it definitely will inflate construction prices. I am not sure if it will have multiplied effect on the economy.
Do you see more of politics and less of economics in this Budget?
Economics in the Budget is not that bad. I think politics is a reality. But one has to see how the whole emphasis on agriculture is going to be translated into sensible programs. Or, is it going to be more of the same?
Corporate India is not happy with the Budget.
Yes, many of us are not happy. Especially the IT industry. The MAT coming in and the overall increase in the corporate taxation by the additional cess are not happy news. Cess is there on excise duty, it is there on everything. It is not a bad thing provided it is used sensibly in the educational sector. But we will have to wait and see.
What are the major minuses in the Budget?
There are no major minuses.
Is it a populist Budget?
The Budget this time is realistic and not populist in the sense that it does not rob Peter to pay Paul. There was a great opportunity because of the revenue buoyancy to reduce the overall tax burden but...
It means an opportunity lost?
I would say opportunity has been postponed, not lost. But if the growth stutters, the revenue buoyancy will come down, and you will have a different situation then. Anyway, nobody is expecting the growth to stutter. Whatever it is, I would give only 6/10 to this Budget.