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Feb 27, 2010, 02.28 PM IST
Finance Minister Pranab Mukherjee today announced a fiscally conservative and largely no-shocks middle-of-the-road Budget. In a special discussion, Jyotiraditya Scindia, MoS, Commerce & Industry; Adi Godrej, Chairman, Godrej Group; Pawan Goenka, President - Automotive Biz,M&M and Rahul Bajaj, Chairman, Bajaj Auto gave their reading of the Budget.
To achieve this, he has expectedly rolled back the fiscal stimulus by a bit, by raising excise duties from 8% to 10%. Also, the minimum alternate tax (MAT) has gone up to 18% from 15%. Corporates, however, got some relief from the cut in surcharge on tax.
For the aam admi, the relief comes from lower personal taxes for incomes below Rs 8 lakh. The Budget also bore the usual Pranab stamp with taxes on cigarettes, tobacco, and large cars going up. What is new is the green effort -- a tax on coal of 5% and lowered duties on wind and solar power equipment.
In a special discussion on CNBC-TV18, Jyotiraditya Scindia, MoS, Commerce & Industry; Adi Godrej, Chairman, Godrej Group; Pawan Goenka, President - Automotive Biz, M&M and Rahul Bajaj, Chairman, Bajaj Auto gave their reading of the Budget.
Here is a verbatim transcript of the interview. Also watch the accompanying video.
Q: Let me start by asking you, we have just heard the finance secretary clarify to us that the sun has finally set as far as the STPI and the EoU benefits are concerned. So they are not going to be extended beyond 2011. They are still undecided on the special economic zones, what are you going to do about it?
Scindia: The finance minister has very clearly in his Budget speech articulated the fact that the SEZ has been successful in conceptual mode. We have received growth of over 127% of exports from the SEZs.
This regime does need to be strengthened, he has very clearly enunciated that. He has also said that Section 6a (II) from April 2007 retrospectively will be in place for IT companies and BPO companies based in SEZs, which means that that gives them a tremendous tax advantage from retrospective effect.
Q: Can I get a clarification from you because we are talking about SME and those are the ones who are actually benefitting the big boys the Infosys and the Wipro’s of the world have not really been lobbying for the extension of the STPI so you are going to be hurting the SME and as far as for SEZ once again the government right here on CNBC TV18 saying we are undecided on what tax treatment should be meted out what does that do to investor confidence and this has been something that the UPA has been touting as its biggest achievement.
Scindia: We are very clear in terms of the employment generation that SEZ have brought about along with the amount of investment as well as the exports that are going out of the SEZ that its much needed fillip to the domestic economy also in terms of bolstering it and as the finance minister said that he is completely supportive of the scheme and I don’t think you need to read more into that and as I mentioned that there is also a retrospective advantage that has been given to BPO and IT companies based in SEZ I think we need to take it forward from here and he is very supportive of the whole concept of SEZ going forward as well.
Q: One of the things that we have seen in this Budget is attempt to move towards partially getting out of this stimulus regime, the excise duty increases etc. Are you okay with that? You think that is the step in the right direction?
Godrej: I would have preferred if the excise duty was not raised because the earlier excise duty was 8% and the likely central GST rate is going to be 8%. So it would have been very good if we just move from that 8% excise duty to the central GST of 8%. Now we have taken it to 10%.
Q: That is a bit of a shocker for the real estate sector as well. That is another area where you are a bit player?
Godrej: We have not fully understood what the impact of that is. We have to study it. That is the service tax levied on flats which are sold before they are completed.
Q: So broadly are you happy with this Budget?
Godrej: Broadly I am very happy because the good points of the Budget are that consumption will rise, the income tax slab changes are very positive in terms of leaving money in the hands of consumers. The additional spending in rural India will be positive in terms of consumption. So consumption led growth to my mind will be strong.
However there are cost increases, excise duty, fuel, freight and those will have to be passed on. What effect that will have on consumption, the price increases we have to wait and watch. The price increases won’t be very high. So hopefully the effect on consumption won’t be anything drastic.
Q: What would you make of this reset in excise – clearly you passed on to the consumer but do you think the government has managed to keep the balancing act going ensuring that excise is hike to a large extent and at the same time ensuring that growth is not disrupted?
Goenka: Well as much as we would have liked to see no excise roll back but I think what happened was inevitable. 2% excise increase is something that we had more or less said will happen. What we are relieved is not 4% but there was some talk of 4% but for the auto industry 4% would have been a disaster, 2% is still high because for a vehicle selling at about Rs 10 lakh that is an increase of Rs 18,000 in the consumer price.
So it is still very high but that is something I believe right now given that there is buoyancy in the market, we probably can manage it.
Q: So you think he is pretty much done the best he could?
Goenka: I think given that there is a balancing act that had to be done. A fiscal consolidation has to be done without affecting the economic growth I think it is about the best that could be done in terms of balancing it.
To catch the complete show watch videos...
Tags: Budget 2010, Jyotiraditya Scindia, Adi Godrej, Godrej Group, Pawan Goenka, M&M, Rahul Bajaj, Bajaj Auto
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