The countdown to the Modi government’s first Union Budget for 2014-15 has begun.
23 Jun 2014 | 2476 Views | By Shobha Mathur
The countdown to the Modi government’s first Union Budget for 2014-15 has begun. With the Centre deciding to present it July 10, after presenting the Economic Survey on July 9, and the Railway Budget on July 8, expectations in the automotive industry are running at a feverish high.
Will ...
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The countdown to the Modi government’s first Union Budget for 2014-15 has begun. With the Centre deciding to present it July 10, after presenting the Economic Survey on July 9, and the Railway Budget on July 8, expectations in the automotive industry are running at a feverish high.
Will the Budget bring the much-needed breather to the automotive sector that has been in the slow lane for the last couple of years bogged down by the spiralling effects of high interest rates and fuel prices, rupee volatility and lack of infrastructure growth? These have all played spoilsport, dampening overall market sentiments and for the auto segment, leading to the biggest slowdown in over a decade.
As the D-date draws nearer, indications are that the government is considering sops to give a leg up to manufacturing and job creation. The agriculture sector is expected to see some reforms and that may have implications for the automotive segment. Last year, the tractor segment was a shining point for the sector, helping some suppliers and OEs see good business.
Last week, the Centre announced a hike in rail passenger and freight charges to raise about Rs 6,500 crores.
For the auto sector, the excise duty cuts announced in the interim Budget of the previous UPA II government come to an end on June 30. So the continuation of excise duty sops remain at the epicentre of the industry’s wish-list to speed up recovery.
“Reduce interest rates, introduce GST, implement Aadhar to prevent leakage of funds meant for poor, get infrastructure projects up and moving, ban overloading, expand bus transport to reduce pollution, scrap old vehicles and restart mining activities and bring back credit for exports,” sums up Vinod Dasari, managing director, Ashok Leyland.
The lack of clarity on fuel pricing, especially diesel, has kept carmakers on tenterhooks while planning new diesel engine plants. Jnaneswar Sen, senior vice-president of Honda Cars India, wants this addressed: “There should be clarity on diesel pricing and continuation of subsidies for better planning, a lowering of interest rates and the reining-in of inflation besides continuation of excise duty cuts as OEMs have not really been able to capitalise on the cuts so far.”
Deputy director-general of SIAM, Sugato Sen is of the opinion that there is negativity in the market sentiment due to high interest rates on auto loans and high inflation. “These should come down and rising fuel prices should be arrested.”
All eyes will also be on the monsoon that is forecast to be lower than normal.