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What young India wants from '08 Budget?

Published on Sat, Jan 19, 2008 at 13:43 | Source : CNBC-TV18

Updated at Thu, Jan 24, 2008 at 15:30

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As the Finance Minister gets ready to present Budget 2008 on the February 29, CNBC-TV18 gets you a sense of what young India really wants.

Finance Minister, P Chidambaram , said, "The year 2007-08, will mark the beginning of the 11th plan. The declared objective is faster and more inclusive growth. I can state with confidence that in the eve of the plan, the economy is in a stronger position then ever before, it therefore beholds us to set higher goals. The approach paper to the 11^thplan states that the plan 'will aim at putting the economy on a sustainable growth trajectory, with a growth rate of approximately 10%, by the end of its period'."

Rajiv Bajaj , MD, Bajaj Auto , said, "The economy is set to grow as robustly, as it will, it'll take a heavy toll on the environment in both, the way goods are created and goods are used. I hope that in this budget or in the subsequent one, the finance minister will bring in this aspect as to how we protect our environment as we grow, because ultimately it's supposed to be about quality of life."

Rajiv Memani , Country Managing Partner, E&Y India , said, "Reducing the custom duty would be the biggest step and that's what he will try and target through the budget."

Anuj Gupta , CEO, Final Quadrant Solutions , is of the view, "Some system of access to information, that's been the key success factor to the developed parts of the world. People are spreading on more information than we are and I think that's some thing that the government should look at."

Vivek Agarwal , CEO, Liqvid , said, "There is an example that I read, Bhutan for improving the public system of education, made it compulsory for all bureaucrats and ministers to send their children to the government schools where they were actually being run."

ID Musafir , Director, M & B Footwear , believes, "The divide between the haves and the have-nots is going to increase, so unless you provide basic employment to the masses of India, and learn from examples like China, where everything co-exists, I think this is what the Finance Minister should look at.

Farzana Haque , Head- Retail & CPG Group, TCS , said, "We are looking at India as a manufacturing hub for small cars, we are looking at semi-conductors, so there are some industries that need their incentive."

Faster and inclusive growth, that's what young India and young CEOs wanted from the Finance Minister in the last Budget. This year, the focus is on agricultural reforms, on strengthening infrastructure and R&D and widening the tax base.

Over the next two months, Young Turks will put a spotlight on the industry wish list of perspectives from young CEOs and entrepreneurs on what they want from the Finance Minister.

From a population of 1.2 billion in India, only 35% have access to healthcare, in fact the government has made health care one of its top priorities. With the beginning of the 11^th 5-year plan, the budget allocation for health and family welfare has been increased by 21.9% to Rs 15,291 crore, but this is just still 0.9% of the GDP, the focus of the government has been on providing primary rural health care through national rural healthcare missions.

The FM quotes, "I proposed to increase the allocation for NRHMs from Rs 8,207 crore to Rs 9,947 crore in 2007-08."

But as the middle class in India grows, an increasing number of people are turning to private healthcare providers. The number one demand of private healthcare players is that the government recognize their contribution without treating them as charities. To get a sense of the prescription to growth, we met one of the prominent names in the Indian healthcare market.

Shivender Mohan Singh, CEO and MD, Fortis Healthcare, who said, "From this year's budget, I expect the team to put health of the nation to the wealth of the nation and give healthcare, the much required infrastructure status."

Fortis Healthcare , a Ranbaxy group company, was incorporated in the year 1996. It has 13 hospitals across six states in North India, including cardiac and cancer specialty centers.

Leading the company forward is Shivender Mohan Singh , CEO and MD. He is now looking forward to growing Fortis's network.

"The focus is going at west and south and also over the next two years, we will be looking at it rationally, though that's not the major focus, that would be more opportunistic and more strategic. But the strategy of the company going forward in the next 3-4 years is to set up facilities on a national level, so we are looking at expanding our north India footprint, to replicate that in the west and the south and after that, in the east," he said.

Fortis, now in its 7th year has created super specialty centers across the country. Starting with cardiac care centers, today Fortis Hospitals are multi-specialty facilities that use state of the art technology. But even with the ever-growing number of private health centers around the country, it hasn't been given an industry status as demanded, so what is the biggest drawback?

Says Singh, "What the government has to do is to stop looking at private healthcare organizations to solve their problems. There was a lot of expectation and talks in the last 4-5 years that whatever the government has not been able to do for access to healthcare, it's now become the private player's responsibility or an expectation that the private players will do that. If you expect private hospitals to start giving treatments for free to a percentage of population or a certain level of population, that's not going to happen because private players are not here to do charity or to government's job, but we can certainly work together. There is a lot of scope for the partnership where whatever agenda the government has, they can channel private players to work together and certainly capacity building is not difficult for a private organization to do as long as they see some benefits in that. So there is a lot of scope to work together but I think the approach has to be more collaborative."

The health care sector for the coming budget hopes that annual poll for incentivising research and annual development will be heard. The sector is also hoping for tax benefits in order to enhance health care service delivery. So how could all of this be achieved?

Singh says, "Health care is fundamental, the social sectors like health and education are the foundations of any developing country. We don't have any such incentive in the industry, so I think infrastructure status study comes out as number one, second is that the time now for the health care industries to be give NA status. We have been running as a healthcare sector for long enough and it is required to give it a focus as an industry and therefore give healthcare an industry status. The third and final one to my mind is something we have talked a lot about, but very little has come out of that, is actually giving a separate license for health insurance and promoting players to get into health insurance and therefore have a third party player model for patients to get insured and get covered. Today 80% of health care in India is out of pocket which is pretty significant in terms for an cost for an individual at an episode if something is going to happen to a member of his family, but if there is an insurance, obviously the bite is going to be taken away and therefore the sting is not there for payment at that point of time, the procedure gets to be done or an operation needs to be done. It also will overtime, start promoting preventive health care which for our country of our size and for the healthcare environment that we have, preventive will be the significant focus going forward, so health insurance would be the third and the last one for an incentive for the sector to grow."

CNBC-TV18 reports on the Budget wishlist of the auto industry.

The Indian automotive industry is one of the fastest growing in the world. In fact, it is the world's second largest two-wheeler manufacturer and can boast to be the world's largest motorcycle manufacturer, with an industry turnover of USD 28 billion this year.

India manufacturers 13 lakh passenger vehicles and 76 lakh two-wheelers per year. The auto component market has a turnover of USD 10 billion and tires of USD 3 billion. But even with this rate of production, India's auto sector is standing in the world is meager.

The sector is hoping to be able to increase volumes, to attract investments in the research and development space, and also to be able to upgrade to newer technology and innovations.

But in the last Budget, the Finance Minister had nothing to help the auto sector. So, this year, we are talking to people in the auto sector, to get a sense of what the Finance Minister can do.

Navin Munjal, CEO, Hero Exports and Head Electric Vehicle Divison: My expectations of the budget this year is to promote this new revolution through tax cuts and import duty subsidization and to promote this category.

The eco-friendly E-bike requires no registration and no license to drive. This is Hero's latest venture, starting in 1956. Known mainly for bicycles, Hero is riding the bigger dream. Navin Munjal is looking at better technology and reducing costs. In more than 300 dealerships across India, the next step is riding into the international market.

Munjal: This year, we are looking more and more to expand in the international markets, towards the North American, Canadian and European markets. That is an area, which we are again focusing on.

Business has, over the last one year, taken a bit of a slowdown, simply because the dollar is going the way it has. The dollar depreciation and rupee appreciation has affected exports drastically.

We would look at this year for some kind of control. We are, at the end of the day, competing against China in the markets. If there is control at China's end, there is no control and a free-fall at the dollar end, then there is a bit of a disparity in the buyers in the foreign nations. They just want a better product at the right price. So, they move towards China in that case.

To counter the competition from China, as well as the growth in nascent electronic vehicles in India, is not an easy task. Navin is looking at making the e-bike, an easy and safe alternative for 16-17 year olds, as e-bikes can only do about 25kmph. They will soon target the three-wheeler market as well. But to be able to grow the market and improve R & D, Navin says the industry needs government's support.

Munjal: We would be looking at the government, to provide support in promoting this product. This is a new revolution that has happened across the country.

They can do that by improving the taxation regime that we have. There is a huge tax that we pay, there is excise, sales tax and corporate tax on these products. If the government supports us in all of these, then that money can be used towards promoting these products in the market and better educating the consumer, about the benefits of such a product.

This product saves you on fuel, pollution, noise and so many other factors. For the low speed products, you do not require license, road tax or registration. In this case, a school going student can actually migrate from a bicycle or a rickshaw to these products.

It would give them much further range and a lot of independence, in order to commute, on a day-to-day basis. Besides that, there is also an issue of power. We would like to target this product to rural markets. But in lot of cases, the rural areas do not actually have electricity or have a very irregular supply of electricity. So, without electricity, how are you going to charge these products. So, that is the problem we face.

We are trying to work on different options like solar, etc. But these are expensive and the propositions would take quite a while, before they can be commercially viable. So, we are right now looking at the government helping us expand in the network and providing some sort of tax benefits, so that we can bring these products to more and more markets.

Within the auto sector, there is a host of auto ancillary manufacturers, who are also looking for government intervention, to remain globally competitive and profitable.

Neeraj Kanwar, Joint MD, Apollo Tyres: Tax reforms should continue the way they are and come in line with the ASEAN countries.

Apollo Tyres is one of the best known tyre brands to come out of India. It was the first Indian tyre company, to execute an overseas acquisition, when it took over Dunlop tyres in South Africa. It also became the first Indian tyre company to touch revenues of over USD 1 billion. The man heading this action is Neeraj Kanwar, Joint MD, Apollo Tyres. He joined the company in 1995 and is working towards touching the USD 2 billion mark in the revenue.

Kanwar: We are very proud of having tires, which are meant for European roads and also for the Indian customer. Our growth plans are how to achieve and keep this USD 2 billion dollar target in the next three years. It is a very challenging target. It is going to be a combination of two things.

Organic growth is going to take place in the company in India and South Africa. The next is going to be an inorganic growth, for which we are looking at various markets and new opportunities in the tire industry.

He thinks the only way to become globally competitive is to become cost competitive. For this, government intervention is necessary.

Kanwar: The government knows that there is an inverted duty structure that is currently in India. Natural rubber is imported at 20% duty, whereas a finished good product can be imported at 10%. That is what we are seeking, from the government, to correct this duty structure.

Wile the company is on the fast track, a possible FTA with China could be the biggest speed breaker.

Jagdish Khattar, Former MD, Maruti Suzuki: The auto sector is doing well. There are problems of rate of interest and other things. But they are not only confined to the auto sector. One hopes that it is a passing phase. So, if the rate of interest can be moderated, then there is nothing like it

LD Mittal, Chairman, Sonalika Group: The tractor industry has been suffering as a whole, due to the non-availability of loans to the departments. So, the numbers have gone down until the last three years, when there was improvement year-after-year in sales. During the current year, there is a downward trend. If the government starts giving loan to the farmers, then this trend can be reversed even at this stage.

Pawan Goenka, President, Automotive Sector M&M: The auto industry has been always asking for one thing, which is to make 16% excise duty uniform to all the vehicles. The Finance Minister had given this 16% to small cars two years ago and we have requested last year and this year, that it should be a uniform duty for all the vehicles. So, that is our primary request to the Finance Minister. We are looking at the various trade FTAs. On that, we need to know that we do not make the local industry non-competitive.

Deepak Kumar Raina, Senior Manager Dealear Development, Swaraj Mazda: In the auto sector, normally all the vehicles are sold through finance only. So, if finance is taken care, then things will be smoother.

Jnaneshwar Sen, Senior GM Marketing, Honda Siel Cars: Budget is very friendly. The government is very proactive, and we would entirely go by the SIAM regulations on the Budget.

Adrian Dass, Manager Corporate Communications, TVS: The norms of the entire Budget has to be tightened enormously. So, there is a consuming class, which is not able to acquire a two-wheeler. Probably, intervention over there would give some help to the industry.