A rainy Wednesday in New Delhi only added to the dampened corporate mood, down after Finance Minister P Chidambaram announced the Budget 2007-08.
The Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (Ficci) and Assocham feel the Budget holds good only for the social sector.
During the first half of the finance minister's Budget speech, members at the Ficci House seemed pleased, with him announcing an increase in Budgetary allocation for social sectors like education, healthcare and agriculture.
At one point, federation secretary-general Amit Mitra thumped the table in joy as Chidambaram had fulfilled his industry chamber's demands pertaining to the social sector.
The mood changed dramatically when the tax proposals were being announced. Some Ficci members looked absolutely dejected. Some industrialists were also seen putting their heads down in disappointment.
Even before the Budget speech ended, CII President R Seshasayee left his seat to meet the captains of the industry. He seemed upset over the Budget's apparent neglect of the corporate sector, despite its good run this year.
Ficci and CII were unable to mask their disappointment. "It is a good Budget as far as education, health and agriculture sectors are concerned, but we were expecting booster doses to further expedite the current economy growth," said Seshasayee.
One of the Ficci members went on to tell journalists that he did not want to react to the Budget as there was nothing in it for the corporate sector.
"Our first reaction is that it is a terrific Budget, but only if you look at it from a social sector perspective. The finance minister has increased the spend on education by 32 per cent, on health by 22 per cent, and farm credit has gone up by 28 per cent," said Ficci President Habil Khorakiwala.
Assocham President Venugopal N Dhoot would only describe the Budget as "pragmatic" and for the aam admi, adding that the proposals are on expected lines, providing the much-needed boost to agriculture, education and health sectors.
"The finance minister didn't have anything major for industry. However, the focus on agriculture is a welcome step and this is the first time that about 15-20 minutes (of the finance minister's speech) were spent on agriculture," said CII member and Bharti Enterprises Chairman Sunil Bharti Mittal.
Ficci general secretary Amit Mitra said, "On the whole, it is not an anti-growth Budget. The Budget is good for long-term sustainable growth since it aims at promoting inclusive growth."
The industry chambers are against the imposition of the fringe benefit tax on employment stock options (ESOPS) and the increase in the dividend distribution tax to 15 per cent.
"The corporate world feels the finance minister lost a great opportunity to reduce taxes. When there is so much buoyancy in tax collections, the finance minister has sent a wrong signal to the corporate world by increasing dividend distribution tax from 12.5 per cent to 15 per cent and bringing ESOPs under the FBT," said Khorakiwala.
Assocham and Ficci had contrasting views on hike of 1 per cent on education cess.
While Ficci is against the move, which it fears, will increase the tax burden, Dhoot said: "One per cent cess levied for secondary education and expansion of R&D incentives to all sectors is a welcome measure. This in turn, will help the human resource of the country, and support weaker sections."
The CII and Ficci are against the imposition of Minimum Alternative Tax (MAT) on the IT sector. "It is disappointing. The IT sector is still growing and taxing IT companies will affect their growth," said Mitra.
Dr Naresh Trehan, executive director, Escorts Heart Institute and Research Centre and a CII member, said healthcare needs to be given infrastructure status and like hotels, should be given tax holidays.
Sushil Ansal, chairman, Ansal Properties and Infrastructure Ltd and the heading of the real estate vertical in Ficci, said, "There are no special incentives for the construction industry in the Budget. Reverse mortgage for senior citizens is a positive step."
State Bank of India's former chairman AK Purwar, a member of the Ficci, said the Budget is neutral for the banking sector.
Bert Patterson, managing director, Aviva Life Insurance, was unhappy that the Budget didn't reflect any long-term development plans for the insurance industry. "There is nothing on pension reforms," he added.
"While massive allocation to agriculture is welcome, the multiplier effect of processing has not been recognised. Food Processing can provide huge benefits to rural India and make India shining," said CII Food Processing Committee, Chairman Piruz Khambatta.