While most market experts believed that Finance Minister Pranab Mukherjee presented an extremely balanced Budget 2010-11 on Friday (February 26), a few considered the efforts extremely unimpressive.
Q: He has made some really nice noises on green energy. They may not amount too much but the fact that he is—it is obviously an area of interest for him and he is focused on it, your company impact and the fact that he has given you an excise cut on rotor blades, he has done that for solar energy as well, what is it going to amount to?
Sinha: Specifically the impact is not going to be that sizeable on Suzlon per se. But the important thing is to look at the government’s entire attitude vis-à-vis climate change in general and their stance on that. And, if you look at the pronouncements in this Budget which has for the first time almost talked about climate change, referred to global warming and has imposed a cess on coal which is a conventional source and created the clean energy fund. I think when you couple all of that with for example the 13th Finance Commission survey that just came out, there is a lot of positive momentum that is building up within this government with respect to an overall thrust area, with respect to climate change. I think that is very positive.
I don’t know whether you have seen the finance commission report or not but about Rs 5,000 crore has been allocated to states over the next few years as being part of their incentive spend that they can get if they were to encourage renewable energy. So I think that, the clean energy fund, the Central Electricity Regulatory Commission (CERC) guidelines that are coming into place, I think all of that is very positive for the renewable sector in general.
Q: The other positive is the fact that he has said the government is committed to continued growth of special economic zones (SEZs) and this leads you to believe that the talk in the DTC that SEZs may lose the entire tax incentive, maybe that will change in the proposals right now and when we do see the final version of DTC, the SEZ bet will continue for a longer time, is that what you are reading into the Budget?
Doshi: That is what I interpreted, exactly the same.
Q: Would you like to see more fine-print on that before you take a call on it and will it depend on the DTC?
Doshi: Yes, but that fine-print won’t come so soon on the SEZ. We have to take this one sentence to take our cues.
Q: Some slightly interesting comments that have come in, financial stability and development council and he said it is going to monitor macro-prudential supervision of the economy including the functioning of large financial conglomerates and address inter-regulatory coordination, what are you reading into this, is this a super-regulatory body that he is trying to put in?
Kochhar: I think if we look at it, there is clearly always a positive side to it to see that get the regulators to work in coordination.
Q: That comes with a financial sector legislative reforms commission to rewrite and clean up the financial sector laws?
Kochhar: Then we should see which laws and what all but I think in the coordination, what is more important is that how do you implement it.
Q: The market sold off a little bit towards the end, maybe that has nothing to do with the way they view this Budget, but do you think this is going to set the tone for growth for next year?
Wadhwa: I think the growth is going to come because as I said earlier, macro-economic factors are all very nicely aligned for India—obviously we still have one European factor to depend on—so much of capital comes through Europe and with all the challenges there who knows what will happen out of that. But I would say that if we were to sit before the Budget and say what are the three-four critical things and how is he going to deal with it, fiscal discipline—he has tried to do the best in terms of telling us where he is and where he is likely to be albeit with some aggressive assumptions, taxes—we were all worried about whether he would bring in capital gains tax, he would remove dividend distribution tax, he would increase STT—he has not tinkered with anything, he has put more money in aam aadmi’s hands so that he is balancing the increase in cost on one side through this excise duty with lower personal taxes. In terms of direction, he has made a very clear announcement, GST will be introduced April 1, and his endevoured will be to introduce DTC on April 1.
So I think what else could you have expected and if all that we had said before the Budget was going to be turning out right, we should be all so happy about it.
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