Thirty-six captains of Indian industry, who viewed the finance minister's Union Budget speech at the Confederation of Indian Industry office in New Delhi, have rated the exercise as 'good'. It could have been a lot better though.
01 Feb 2017 | 4820 Views | By Shobha Mathur
Captains of Indian industry have given an overall positive rating to the Union Budget 2017. The finance minister’s speech, beamed live at the Confederation of Indian Industry (CII) HQ in New Delhi, found most of the 36 top management comprising presidents, vice-presidents, chairmen and CMDs present there giving a good ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Captains of Indian industry have given an overall positive rating to the Union Budget 2017. The finance minister’s speech, beamed live at the Confederation of Indian Industry (CII) HQ in New Delhi, found most of the 36 top management comprising presidents, vice-presidents, chairmen and CMDs present there giving a good rating to the annual fiscal exercise.
Overall, the industry heads pegged the Budget as a ‘good’ one as it rolled out a number of initiatives that would impact the industrial scenario in the country in a positive manner. For instance, the huge infrastructure spending outlined got a thumbs up and even the Sensex rose by 500 points. For long, the Indian automotive sector has been batting for a push to infra growth that will empower the economy, leading to a cascading effect on the auto sector. While there are no direct benefits to the auto sector, it will gain from growth in the rural market and the humungous infrastructure spend.
Dr Naushad Forbes, president of CII, spoke about the Budget being overall very useful and providing a significant investment for infrastructure. “The move to reduce corporate tax to 25 percent for MSMEs with a turnover of less than Rs 50 crore makes a lot of sense and covers almost 96 percent of the entities.” He however admitted that “we would have liked to see 100 percent companies being covered and that was a part of the CII recommendation of moving to a more simpler and exemption free tax system.”
The Union Budget has provided for a sizeable investment of Rs 241,387 crore for the overall transportation sector, encompassing rail, roads, shipping within its canvas for the fiscal.
Under the road sector, Budget allocation for highways has been stepped up from Rs 57,976 crore in FY 2016-17 to Rs 64,900 crore in FY’18 with 2,000km of coastal connectivity roads having been identified for construction and development. Total length of roads, including those under the Pradhan Mantri Gram Sadak Yojana built from 2014-15 till the current year, is about 140,000km which is significantly higher than the previous three years. In addition select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode.
Pace of construction of PMGSY roads also accelerated to 133km per day in 2016-17, against an average of 73 km during 2011-2014 showing a steady growth.
Among other highlights was the Government’s move to abolish the Foreign Investment Promotion Board, a decision which was looked at by CII members present at the Budget viewing as a step towards the liberalisation of the FDI policy as 90 percent investments today come via the automatic route. It was considered a courageous and long overdue move as well as the first of many steps towards removing such institutions and agencies that have outlived their role. While the Budget has abolished the Foreign Investment Promotion Board in 2017-18, further steps to liberalise the FDI policy are also under consideration.
Wait for GST to know real impact, says Rahul Bajaj
Rahul Bajaj, chairman of Bajaj Auto, pointed out that there is nothing specific in the Budget for the automotive industry as indirect taxes do not find a mention. As such, the auto industry will have to wait for GST to roll out to check its impact on automotive sales.
“We had already recommended more infrastructure development so the announcement was on expected lines and is good as it will boost growth in the economy. But it is too early to say whether market demand will pick up with the Budget,” added Mr Bajaj.
Also welcomed by the industry captains was the order to make micro small and medium enterprises more viable with income tax reductions.
Bajaj welcomed the initiative, saying anything that reduces tax is good. However, as regards personal income tax rates on individuals, he averred that only lower slabs between Rs 2.5-5 lakh had attracted a 5 percent tax cut with a 10 percent surcharge levied on higher incomes between Rs 50 lakh and Rs 1 crore which he felt should also have been reduced.
Other industry members felt that the honest tax payer should have been given some exemptions on higher incomes as well.
While welcoming the announcement on the 100 skill development centres to be established for promotion of international skills, industry preferred to wait for the details of how the government planned to move on it.
With the finance minister’s first half of the Budget speech was dedicated to boost rural development and agriculture, these were considered as a boost to income generation and employment creation in this region that would have a multiplier effect. “Consumption of items at the lower end will be increased as rural investments will affect spending power,” said Forbes.
However, most felt that a lacunae in that no provision had been made to boost consumption at the higher end of the strata with the Budget enhancing activity in particular areas.
Also read: Budget FY2018’s rural India and infra focus to have indirect benefits for India auto
Photography: Mohammed Shafiq