At the Rediff Chat on Tuesday, industry captains shared their views on Finance Minister P Chidambaram's Budget for 2006-2007.
Here's what they had to say.
Saroj K Poddar
President, FICCI
The most significant points in the Budget are the enhanced allocations for infrastructure like roads. I am sure this will drive growth.
We are also glad that Finance Minister P Chidambaram has announced a series of incentives in the agriculture sector. He has made good allocation for agriculture. This will increase agricultural output and it will in turn help develop the rural areas.
One area of concern in the Budget is power generation. The finance minister has now announced five new power projects, and we hope these new projects will accelerate growth in the industrial sector. But our concern is whether the power projects will be executed on time.
It is also great that Chidambaram has not touched income tax rates. I believe reducing the excise tax rates will lead to more manufacturing. The finance minister's idea to introduce goods and services tax by 2010 is a good move forward.
R Seshasayee
Vice President, CII
I feel overall the Budget is good. The good news is that we must celebrate the tax-GDP ratio of 10 per cent. It proves our economy has arrived.
The disappointing factor is the continuation of bank withdrawal tax.
Another good thing about the Budget is that it continues to put emphasis on education.
The overall approach is good for economy and country if we continue to pay more attention on education.
Rahul Bajaj
Chairman, Bajaj Auto
The two-wheeler industry did not expect anything from this budget. The fact that there is no change I am happy about that. Small car manufacturers -- like Hyundai, Maruti and Tatas -- would be very happy. Those who do not manufacture small cars would be unhappy.
I am not disappointed with the Budget. People who expected too much from the finance minister would be disappointed.
I don't believe in giving numbers to the Union Budget. Overall, I feel the Budget is fine. I am satisfied and happy.
Daljit Singh
CEO, Fortis Healthcare Limited
I think the finance minister has carried on with this Budget as he did last year.
I was not expecting huge and significant changes. The finance minister has honoured his commitment and has strengthened the growth path that the government has taken in the last two years.
In terms of incentives or attracting investment in the health sector -- particularly in the hospitals and medical colleges - this Budget has been a disappointment.
Overall, the Budget is positive. I would give it 7 on a scale of 10.
Amit Goradia
Chairman, Jewel Brushes Ltd
It is a positive Budget, but it has no bold steps.
The rural sector has to develop. If we want 7 per cent to 10 per cent growth, the rural sector is important.
It will be very good if we can manage the 8 per cent growth rate. The direction is positive, but it is not a pathbreaking Budget.
A K Taneja
President, Automotive Component Manufacturers Association Of India
The Budget is very positive. The GDP of the country is growing at the rate of 8 per cent. There is promotion of modernisation of industry and providing (excise duty) relief on small cars. The component industry has a good future.
I would have liked to see more reduction on raw materials. We are in the competition with the ASEAN (Association of South East Asian Nations) where the excise duty is only 1.5 per cent.
Overall, the budget would help the automobile industry.
N Srinivasan
Director General, CII
You cannot say that reducing taxes of soft drinks, ice creams and processed food are meant to help the MNCs. We make more strata of society capable of buying processed food.
If we can make mineral water cheaper, it is good. Don't look at it negatively.
Sushil Ansal
Chairman, Ansal Properties
The Budget is not very exciting for the construction industry. There are no incentives for the housing sector. There is nothing mentioned about rural housing. Moreover, the service tax on the construction industry is uncalled for.
Construction is booming in the country, and what we need are cheap, good and affordable houses. We are sure that the building trend will continue in the next few years, but the Budget does not reflect anything on the construction industry.
It is a cautious budget. It is not an aggressive budget. We fee that more incentives should have been given to the industry.
Pradeep Singh
Chairman and CEO, IL&FS
It is a bland Budget. There is no excitement in the budget. There is nothing substantial to report.
On infrastructure, the commitment to public-private partnership has been reaffirmed, which is a good thing. Of course, the devil lies in the detail.
Earlier also public-private partnership was mentioned -- viability gap financing has been established.
The progress on those has been very slow because of the lack of clarity on the process. The issue is of the process management.
Some of the problems, it is not fair to expect the Budget to solve. But very often the Budget being the most important statement of the government, it can be used to push in certain direction.
For example, they could have said in the Budget that the funds under the National Urban Renewal Mission that are to be given to the cities and states will be linked with higher levels of operation and maintenance and better levels of tariff collection.
It is supposed to be a reform-linked programme. Those kinds of areas, which are currently weak, could have been expressed through the budgetary thrust, which has not been done.
On the road sector, we clearly see real progress. Rs 1,000 crores for new greenfield roads have been set aside in addition to the NHAI (National Highway Authority of India) programme. This is excellent. It will decongest existing roads and a new corridor will not mean a road, it will be a corridor of industrial growth. Because around a road will develop a new hinterland. The single most important announcement on infrastructure is this one.
Not that Rs 1000 crores is terribly large, but it sets a new way of thinking. On the water sector, there is complete lack of focus, and that is very disheartening. It is an extremely critical area because as a nation we are going to face huge water crisis.
Sudhir Jalan
Chairman, Sicpa India Ltd
The Budget's emphasis has been continuity. There have been no major changes. The thrust continues on infrastructure, education, health, reduction of fiscal deficit, revenue deficit.
It is not a very interesting Budget. But it is a very productive Budget.
He has given some relief to excise duty in quite a few industries like aerated drinks and more cars, which will benefit and increase demand.
At the same time, he realized what we have been asking for a long time -- contravening duty that he has imposed to protect the Indian industry from the reduction of duty.
You must realise his compulsions also. He runs in a coalition government, supported by the Left. Knowing Mr Chidambaram, he would come up with a much more bold Budget. But he has to restrain himself. I would consider giving him 7 on 10 on this Budget.
Sunil Alagh
Consultant
The Budget is not extraordinary. But the stress has been on growth and more investment.
On the tax front, Mr Chidambaram is right. I never expected that he would touch the income tax rates.
He has reduced the excise duties on cars etc. That will spur more manufacturing in the country. There is a need for manufacturing to pick up in India -- to compete with countries like China. More measures could have been taken by the FM in this regard. So that is one areas of concern.
It is a great move that Mr Chidambaram has introduced goods and services tax. Let us hope it is implemented by 2010.
Yogesh C Deveshwar
Chairman, ITC
We could not have expected a better Budget. The fiscal Budget has been better managed. The GDP grew faster than expected. This has given the finance minister more space to move forward.
The road map is clear. Last year's path is still being followed. It's a growth Budget. It's a Budget that encourages investment and consumption. The social sector spending will benefit the common man. Excise duties on life saving drugs and anti-AIDS and anti-cancer drugs have been reduced.
The Budget is good as heavy spending has been allocated to those sectors that are employment intensive. The road to a single national tax is very good. A single goods and service tax even four years from now is welcome.
Fifty-two per cent of the GDP is service and so to mobilise revenue he has to increase that tax. Nothing wrong in that. And more Indians go abroad than foreigners coming in so taxing outbound air travel is correct.
Small cars will become internationally competitive. We will become a manufacturing hub.
Eighty-five per cent of tax on tobacco is paid by cigarettes. I can comment on correcting this anomaly. I cannot comment on the fact that liquor tax has not been increased.
When we have moderate taxation and the tax base is increased larger number of people pay and share the tax burden.