While not a blockbuster, the budget had positives for a few sectors, say industry captains
If the build-up to the Union Budget had everyone in India Inc looking forward to a "blockbuster of a budget," reactions are much more subdued after the Finance Minister's speech on February 1.
The response of the markets - Sensex ended Saturday with a drop 987 points - notwithstanding, some of the biggest corporate voices from the industry seemed to have toned down their responses.
While many of them welcomed steps to boost incomes in the rural sector, a near no-show for the manufacturing sector would have been a dampener for core sectors hoping to get a boost to overcome the economic slowdown.
Moreover, hopes for a better consumer sentiment after changes in the income tax slabs seemed to have disappeared after reports that the net benefit may be minimal.
"Although my immediate response to the budget was satisfactory, now that I’ve read the fine print I must say I’m less optimistic about strong economic revival. In fact, the removal of exemptions and DDT will hurt individual taxpayer and affect consumer spending. Why no export incentives," asked Biocon Chairperson and Managing Director Kiran Mazumdar Shaw.
Finance Minister Nirmala Sitharaman has left it to the tax payers to choose from the old or new tax regime, with the condition that the latter will be without any of the tax exemptions.
"Amidst global turbulence and nations dealing with bushfires & Coronavirus, FM Sitharaman has looked to craft a granular long term strategy to focus on vital issues," said RPG Enterprises Chairman Harsh Goenka, who also took to Twitter to give his view on the Budget. While the nation was looking at her with hope, she had little room to manoeuvre, he said.
While the Budget did abolish Dividend Distribution Tax, and underlined the importance of the rural sector, said a top official of a steel company, the industry was looking for big ideas that could push the economy out of the slowdown.Mahindra Group Chairman Anand Mahindra perhaps had captured the expectation in the following tweet:
So with a forecast rate of growth of 5% for our GDP in ‘19-‘20 we’ll fall behind them again? This should get our competitive juices flowing. @nsitharaman ji, let’s surprise the world with a blockbuster of a budget including some dramatic moves. And sprint back in front.. https://t.co/uxTHMUGdeo
— anand mahindra (@anandmahindra) January 13, 2020
One of the sectors that was looking for a big push was real estate, which is also a big consumer of steel and cement. But that was not to be.
"The budget fell short of industry expectations... As far as the real estate sector is concerned, the industry was hoping that the Government would come up with measures to boost housing demand. However, the removal of exemptions under the new income tax regime, implying no tax benefit on principal and interest for home loans would be a dampener for the sector," said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
The bright spot, he added, was the extension of benefit for affordable housing for the developers as well as home buyers by one year.
Gopichand Hinduja, Co-Chairman, Hinduja Group, acknowledged that the Finance Minister had a tough balancing act to do, given the fiscal deficit, but added: "Given the job creation potential of the auto sector, which is currently in the depths of distress, the Budget could have done more."
Despite the subdued response, other captains of the industry also pointed out the positives from the Budget.
"The announcement for 100 new airports under UDAN is a very positive move that will further strengthen an already successful scheme," said Ajay Singh, Chairman and Managing Director, SpiceJet.
"Concessions to sovereign and pension funds to get long term funds for infrastructure is positive too," he added.
The focus on rural India was a plus, said TV Narendran CEO & MD, Tata Steel. "The aggressive focus on the rural and agriculture sector is a welcome step. The goal of increasing farmers’ income will give a fillip to the rural demand and support growth," he said.
Narendran also saw positive signs for the steel sector. "Initiatives like expansion of national gas grid and piped water supply to households will boost steel demand," he said.
CP Gurnani, MD & CEO, Tech Mahindra, pointed out that the Budget has given a push to digital penetration in the country "by making Fibre to the home (FTTH) accessible to 100,000 Gram Panchayats via BharatNet, which will go a long way in bridging the digital divide.""Also, the decision to build data centre parks for the private sector is another step towards making India a data economy superpower," he added.
Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!