Union Budget 2012: Industry reactions

Financial Express,

The Finance Minister played it safe in unveiling the Union Budget 2012-13 on Friday, pledging reforms but setting only modest targets for trimming a ballooning fiscal deficit.

Following are the reactions from top executives from different industries:

Mahesh Krishnan, VP-Home Appliances, Samsung India
The benefits announced for key sectors like infrastructure, agriculture and education are bound to improve the overall economic scenario. However, the budget does not bring any relief to the consumer electronics industry, which has been reeling under the impact of rising input costs and rupee depreciation in recent times. The rise in excise duty may lead to an increase in prices of consumer electronics products.

Rajdeep Endow, MD, Sapient India

On the whole it has been a very average budget. There was an opportunity to make some clear moves to move the needle on growth and investment. Instead, we have been given a safe budget. The increase in excise duty and service tax will hurt growth and will likely cause inflationary pressures. For the IT industry, I expected to see MAT exemption to SEZ units, which did not happen. On the positive side, I welcome the increased investment in education, health care and housing.

Sabyasachi Patra, Executive Director, MAIT

MAIT welcomes the allocation of 1000 crores for National Skill Devleopment Fund as that will help in bridging the gap in skills. Setting up a Credit Guarantee Fund to improve flow of institutional credit for skill development will also be a good move as it will help in acquiring specific skills by individuals.

Ameera Shah, MD & CEO, Metropolis Healthcare

Although the Union budget 2012 – 13 has given some importance to strengthen preventive healthcare, to upgrade 7 more government colleges, and to modernise existing vaccine units, however, the industry expected much more than this.

Some of the key elements crucial for the sector’s growth were not highlighted by the government in this year’s budget such as — Reduction in customs duty on life-saving medical devices and diagnostic reagents; granting subsidies for setting up new healthcare services in small towns in India; tax benefits for investment in healthcare; a clear PPP model and plan in healthcare.

In short, although the sector holds enormous potential, it is still waiting to be unleashed. The current scenario clearly indicates that health of the common man is of little interest and will be ignored for one more year.

Gaurav Malhotra, MD & CEO of Patni Healthcare

he Union budget 2012 – 13 which was announced earlier today has shown no positive intervention for the Indian healthcare sector. Apart from a 5k tax benefit for health prevention screening, there has been no major positive intervention on the part of the government towards improving this sector. With a shortage of 3.6 mn beds, 1.9 mn doctors & 3.7 mn nurses, the vision of achieving a doctor population ratio of 1:1000 is still a far-fetched reality. Moreover, an increase in Service Tax from 10% to 12% will result in an additional financial burden to be borne by the end recipient.

Henrik Fagrenius, MD, Scania Commercial Vehicles India

I think the government has taken a step in the right direction in placing emphasis on developing the infrastructure in the country. However we believe that this will gain momentum when the GST regime is implemented and the FDI into multi-brand retail entry into the country is approved. We do hope to hear positive news on this at the earliest that will go a long way in the development of the Indian economy.

Jagdish Mahapatra, Managing Director- India and SAARC, McAfee

Last year, due to unfavourable global factors, India’s economy was largely affected. This year, the Finance Minister has proposed a fair bill which is for the most part populist in nature. It bodes well for new investors and also creates a wonderful picture in the health, education, NREGA etc. sectors. For the IT industry however, this is a moderately encouraging bill and has made few strides in the development of the sector.

Akshay Mehrotra, CMO, PolicyBazaar

“This year’s budget has been a quite a non- event and not aimed at boosting fiscal consolidation, food security or DTC. It will be difficult for finance minister to keep the fiscal deficit at 5.1%. The highest saving possible will get around Rs22000 more in your hands but this will be nulled out with the increase in service tax and inflation.”

Om Chaudhry, Founder & CEO, FIRE Capital

Another lost opportunity by our Finance Minister, who could have done significant lot to drive the consumer demand for real estate and turn the fortunes of the sector and in turn give a fillip to GDP growth in 2012-13. While he mentioned that the objective of the budget was to create conditions for growth and to focus on domestic demand driven growth recovery, however he gave the real estate sector, which could have helped him meet these objectives, a miss.

Hike in indirect taxes will definitely impact the cost of delivery of real estate impacting overall demand. Further, shifts in tax slabs are too small to influence incremental demand.

No other positive measure to lend higher vibrancy into this sector was introduced or mentioned by Mr. Pranab Mukherjee. Any step towards attracting more FDI into the sector through relaxation of investment and exit norms providing a conducive environment for exits could have gone a long way in getting international interest back into Indian realty.

Prithviraj Kothari, director, Riddisiddhi Bullions

Budget 2012 has been a disappointing one. We strongly oppose this budget. It will create a negative impact not only for the bullion and jewellery dealers but also for the common man.

We can say that government has levied an extra 2% duty on the common man. Increase in gold prices along with this increase in duty- how will the common man survive? This move will create a slump in the market and result in smuggling and opening up of other illegal channels to get gold in India.

The only positive point is the removal of excise duty on silver branded jewellery. But I personally don’t think that will really help.

Dr Ganesh Natarajan, President & CEO of Zensar Technologies

“Nothing much in the budget for IT and not enough focus on incentives for skill building or Tier 3 cities :The announced advance pricing agreement may help transfer pricing decisions and the USD 1 bn vc fund focused on msme is good for entrepreneurship.”

Naresh Wadhwa, President and Country Manager, Cisco India & SAARC

The government’s focus this year on enabling “faster, sustainable and more inclusive growth,” through the twelfth five year plan is welcome.

Scaling up of the Aadhar project as well as enabling it to support PDS will greatly benefit the common man. Leveraging technology to transfer subsidies directly to beneficiaries is definitely a positive step.

On the industry front, setting up Rs 5,000 crore venture fund for MSME sector is a welcome move, given that SMEs employ a sizeable population. We are also hoping that the GST roll out is on track for August this year.

Overall, it is heartening to see that the budget addresses some key areas like education, healthcare and infrastructure which are critical to national growth & development.

Dinesh Agarwal, Founder & CEO, IndiaMART.com

We welcome the Union Budget 2012-13 presented by the Hon’ble Finance Minister (FM) today.

While the FM called for speedy reforms today, the Budget did not indicate much in that direction. The key highlight, however, was ‘GST’ which is now expected to be operational by August 2012. We hope that this timeline is met as it would certainly help address the multiple taxation issue faced by the MSMEs currently. We had also expected some effective mentions to simplify taxation and also consolidate multiple departments to allow better compliance by MSMEs. This still remains to be looked at by the government.

Another positive for MSMEs in this budget was allocation of Rs 5,000 cr to SIDBI for venture fund which would enhance equity availability to MSMEs. Exemption of capital gains tax from sale of property when proceeds are used for investment in SME would also help augment funds for SMEs to a certain extent.

Also, the move to raise the turnover limit for compulsory tax audit for SMEs to Rs. 1 crore from Rs. 60 lakh would also bring relief to many SMEs.

We believe that there was a scope for bolder announcements for MSMEs which could have brought a sea-change in their productivity and growth by eliminating the challenges faced by them.”

Anil Valluri, President, NetApp India

The Finance Minister has been consistent with his social inclusion agenda and there has been an impressive rise in allocations for several key schemes including rural sanitation and water (27% increase) and right to education (21% increase). Corporate tax not being tinkered with is the only source of joy for private industry in general. Skill development being the other area where the minister has put a lot of stress on with a commendable credit guarantee scheme rolling out in addition to an enhanced allocation (Rs 750 cr) for the National Skill Development Council. We in the IT industry welcome this initiative. On the governance front a proposed new bill addressing procurement concerns will also help players like us in the IT industry if passed.

Concerns around price rise aggravate however with an increase in excise duty and service tax proposed and with no significant tax exemptions announced, the burden felt by the tax-paying citizen will go up further. Overall a conservative and cautious budget focusing on fiscal consolidation.

Devanshu Gandhi, MD, Vadilal Industries

Although not been as per the expectations, the 2012-13 Union Budget seems to bring some good news for the power & infrastructure sector. This will directly or indirectly benefit almost all the industries.

However, the 2 % increase in excise duty will not only add to the already high inflation but will also hurt the sentiments of industries.

Alok Sanghi, Director, Sanghi Industries

It is a very realistic budget. The higher taxation on account of excise and service taxes was unwarranted; Especially at the time when freight costs have gone up recently. This will impact the Cement prices and will lead to inflationary trends. On the other hand the focus of Government on the demand generation with special focus on infrastructure and low cost housing is commendable and will lead to better demand of cement.

Birender Ahluwalia, director , distribution and sales, Max Bupa

Union Budget 2012-2013 is a balanced budget with increased focus on providing an impetus to the social sector. Also the increased allocation to health schemes for the urban Indian will help address critical segments of the healthcare industry.

Also increase in allocation to NRHM is a welcome step as it will accelerate the mission of affordable and accessible healthcare to all.

Ashok Reddy, MD ,TeamLease IIJT

It is a welcome move that the Centre has allotted Rs 1000 crore for skill development this year, compared to Rs 500 crore last year.

This will provide more opportunities to accelerate the skilling of labor for various sectors of the economy. With the added budget allocation we expect the Centre and States to come up with more partnership programs with the private sector to reach the common goal of improving the employability of the youth in India.