Union Budget 2015: Here's why India Inc gives thumps up to Jaitley's Budget

Ravi Uppal, MD and CEO, JSPL said the Budget reassures directions and visions laid out last year by the government.

Naina Lal Kidwai of HSBC expected government to relax the fiscal deficit target for next fiscal. She was anticipating more announcements on consumer-led demand 

Mukesh Butani of BMR Advisors said government targetting subdued collection target will make doing business easier.

Sumant Sinha, Chairman, ReNew Power also contributed to the discussion.

Shereen: How good this Budget has actually been for the infrastructure sector?

Chatterjee: For the sector as a whole you will get segment wise analysis from my friends and colleagues here and outside but for the sector as a whole, frankly it has been a very good Budget. Infrastructure has been called the elephant in the room and with the slew of positive interventions that we have seen this elephant might just begin to start dancing again.

Shereen: I am sure you have drawn up a list of things that have happened on the tax front and the devil often lies in the detail. Any nasty surprises that we have missed out on so far as far as tax is concerned? Butani: No, I just wanted to take a point on 25 percent reduction in corporate tax. He is not saying this is a done deal, he is saying my effective tax rate is 23 percent today, as it rises up I will bring down the corporate tax rate over a four year period because we will exclude the next financial year 2015 and 2016. The biggest takeaway for me is the tax collection trend that he has demonstrated for 2015-16. So 13 percent increase in direct tax, the lowest tax collection buoyancy in the last decade which means he is reasonable and what is going to happen is that this is going to put less pressure on the field offices to collect taxes using corrosive measures or unabated assessment so on and so forth.

Shereen: For the first time in many years we have actually seen the Indian stock markets closing on a high on the day of the Budget. In light of the announcements that have come in from the government on Budget day, what is the equity India stock market story look like? Do you believe that valuations are currently stretched, do you believe that the finance minister and this government have been able to provide more levers for growth and hence we could see a further upside? Schissel: Broadly speaking most foreign investors will again on a very superficial level welcome the Budget. When you look at Indian valuations compared to other emerging markets or the developed markets against India\\'s own history it is looking a little bit pricey. Of course when you start to compare India\\'s premium today versus what it previously had versus global markets it doesn’t look too pricey at all. So, the sort of net impact and we have had a lot of major foreign investors who have been looking at India have seen this huge run up in the domestic Indian indices, a lot of them have missed the boat. So far foreign flows weren’t that large into the equity markets last year. So, my conclusion would be this Budget will now mean that certain investors who have missed the story so far will probably have a proper look at India and therefore I don’t think valuations as they stand today are too much a deterrent. There are some issues but I don’t think they are too bad.

Shereen: While they have upped the target as far as the renewable energy sector is concerned, have they done enough to be able to nurture the industry? Sinha: In the Budget not necessarily so, other than what they have done generally for infrastructure. As Vinayak was saying particularly on the financing front a lot has been done and ultimately all of that will percolate down to our sector as well for sure. So, that by itself is a lot in general. As far as renewables itself is concerned there is a lot of work that this government is doing outside of the Budget. I think the Budget didn’t really specify anything specifically for renewables.

Shereen: Nine on ten coming in as far as the infrastructure thrust of this Budget is concerned. Let me ask you to talk to us about one of the other significant highlights and that is the GST. I know you have been campaigning for the government to get on board as far as the GST is concerned for several years you have believed that it can add between one and two percentage to the GDP. How confident do you feel that GST April 1, 2016 is now a reality or will be a reality? A: First of all it is very good that the Finance Minister has announced a target date for its implementation. A lot of work has been done; lot of agreement has been reached on GST; of course the constitutional amendment bill needs to be passed in this session for it to become a reality to be implemented from April 1, 2016. I am quite confident that it can be done, it will be a game changer, it will add two percentage points to GDP growth other things being equal. There has been no reform which is as important to the economy as this one will be and I do hope it sees the light of day by April 1, 2016.

Shereen: Because there was nothing in the Budget specifically as far as the auto sector is concerned. The excise duty rollback had already happened in December but specifically for electric vehicle he has allocated Rs 70 crore. I don’t have the fine print on me right now. So, I don’t know what he says in terms of how he intends to use that Rs 70 crore, but this is a campaign that you have been lobbying for a long time, so you are a happy man today? Goenka: Yes, you are right that in terms of any excise specifically there is nothing for the auto sector but then again we are not expecting anything because excise was increased on January 1 and therefore we will not expect a change to happen in this timeframe. So it does not come as a surprise or a setback to the auto sector that excise was not reduced or changed. As far as electric vehicle is concerned yes, we have been on this to say to get this scheme or incentive come in for electric vehicles. Rs 75 crore is not much but I would expect that this is sort of just seed money that is being put in, but if electric vehicles do take off with this incentive from the government then perhaps more money would be coming in. The fine print is not available yet so I also do not know how the Rs 75 crore will be spent but no matter how it is spent it certainly will help the electrical vehicle movement that Mahindra is certainly pioneering to move forward and bring in cleaner vehicles into India.

Shereen: First the Railway Budget hikes freight rate which clearly is not good as far as your sector in specific is concerned. Second your demand for a customs duty or a higher customs duty has at this point in time not been addressed, they have taken a enabling provision but when they move on that is a different story and you have been talking about cheap imports coming in from China so how would you assess this Budget? Uppal: On the whole I would say that the Budget has lot of positives and is basically reassuring the direction the present government laid out last year, so it is giving the remote details. So, on the whole a very positive but I am somewhat disappointed when it comes to the manufacturing sector, the government could have done a lot more.

Shereen: Sumant Sinha saying that he believes the Finance Minister should have stuck to the 3.6 percent fiscal deficit target. Most people seem to have said that its okay for the slippage because they are using that money to fund public investment on infrastructure in specific. Both on the fiscal consolidation roadmap that this government has held out and specifically on the issue of banking and this business of actually setting up a bank holding company they have put in an interim arrangement. Eventually they hope to go to a bank holding company, your thoughts on both those issues?

Kidwai: I was clearly a votary for the fisc being relaxed. I think the 3.6 percent that had been set in the maiden Budget was really very harsh given what the government had been delivered up. The danger and the real sham that then happens is that capex just gets carried over to the next year and the next year needs to be corrected. So, I had actually quite openly suggested that may be 3.8 percent was more like it. So, 3.9 percent is good. It is very important that the government stays on the track for the 3 percent. The fact that it has delayed to 3 years rather than 2 I think we can swallow it but it is something that we have to be very cautious about and really monitor very carefully because the promise is that it is going to go towards capex and it is very important that it goes into the capex because the quality of our fisc is what is important.