Budget 2016: Not sure whether middle-class euphoric with Budget, says Biocon

She further added that general insurance companies being listed could bring divestments which can garner quick revenue over the year.

Contrary to most opinions on bank refinancing, Prashant Kothari of Pictet Asset Management said that the problem of stressed assets has been growing over the years as banks kept on giving money to 'bad corporate'.

Hence, we need to focus more on how these budgetary amounts are being spent, he added.Sumant Sinha, CEO of ReNew Power said that there is nothing specific in the Budget for clean energy sector.

Manish Chokhani of Enam Holdings, Ashok Wadhwa of Ambit, Vinayak Chatterjee of Feedback Infra and Sudhir Kapadia of EY were also part of the discussion and shared their views on the Budget.Below is the verbatim transcript of the panel discussion.Q: Since we are talking about some of the disappointments on the Budget, as far as the corporate tax rates are concerned, headline corporate tax rate remains as is. Of course some of the exemptions that were supposed to be weeded out have also been given a little more time now. Specifically, as far as the R&D exemptions are concerned, would you be satisfied with what the government has announced? Shaw: The way I look at it is that certainly, we are not very happy with reduction in weighted average from 200-150 percent, but then on compensatory note, the introduction of the patent box regime which basically allows you to book income from IT and patents at 10 percent tax is a very welcome move. So, I think they have compensated it in that way. But what I just wanted to mention was I think the Finance Minster, like all the other panellists have said, has balanced the books pretty well. He has cut out a roadmap which is certainly focused on very strong inclusive growth. He has basically, focused on rural revival and made all the right investments in the farming sector, in rural connectivity and what have you. But what is very important is for us to make sure that these fiscal allocations are spent in a timely manner, because if we do not do that, then all that these allocations have to do in terms of kickstarting the rural economy, will not happen. And that is the worry for me. And remember, the Modi government was voted in on the back of the aspirational urban middle class. I am not so sure that the aspirational urban middle class is that euphoric about this Budget. The farmers certainly, have got a much better deal than what they expected, but we need to balance it out that way because we need some big ticket investments in the manufacturing sector. I am not so sure that there is enough going by way of incentivising those investments. So, I fear that the Make in India story is still a big opportunity for India. We need to make sure that we enable it to happen. As far as science and technology and research is concerned, I am sure we will see, it is not the sort of Budget day announcement that is important, but it is important for us to make sure that we continue to drive and invest in science and technology. So, my overall take on this Budget is, it is a very reasonable Budget. I do not think anyone can fault this Budget because it is focusing on rural prosperity. It is trying to bridge the divide between rural and urban rate of growth, so overall no complaints, but I am sure some sectors are not very euphoric. Q: Besides the rural development schemes which got about Rs 87,765 crore in total, it was the infrastructure sector, roads, railways which got a significant amount of money, Rs 2,18,000 crore put together between railways and roads. The question now, of course, is on the money being spent. We have actually seen success as far as the roads side is concerned. Railways perhaps, has been middling. How would you assess the performance of the Budget as far as the infrastructure promise is concerned? Chatterjee: On the infrastructure situation, there has been a humongous allocation as you rightly said. The railway Capex budget, take the governmental system in totality, the railway Capex budget is about Rs 1.21 lakh crore. The roads budget is about Rs 97,000 crore and the rural infrastructure which is an interesting mix of irrigation, water shed, rural electrification, and rural road, all of that put together is short of another Rs 1 lakh crore. So, Rs 3 lakh crore broadly being pushed into infrastructure with a very heavy proportion on rural is in some sense transformational for rural India. But more interestingly, where there has been a little discussion across the day, is the fact that he has pushed some major buttons on private-public partnership (PPP) and I think that has gone unnoticed. For example, the entire woes of the construction industry in terms of stuck liquidity has been addressed hopefully with the public utilities resolution of disputes bill, which should be music to the ears of the top and the middle construction companies, because the sentiment is that about Rs 1,00,000 crore of liquidity is just stuck in claims and settlements. Secondly, after about seven years of trying to convince various shades of government, the past and the present, we finally have a Finance Minister who recognises that renegotiation of PPP is an important element to get confidence back. So, he has taken a stand saying that guidelines for renegotiations of PPP concession agreements. Q: Ashok Wadhwa saying the big disappointment and that was a disappointment even as far as the market was concerned despite the several caveats that the Finance Minister held out that we will provide more capital if needed so on and so forth, the minister of state for finance also saying that we need to look at the consolidation road map to arrive at a number that we could possibly put on the table as far as the recap plan is concerned. Consolidation is not going to happen over the next six months or 12 months. We have seen how long it has taken to move even as far as State Bank of India (SBI) is concerned with the union trouble so on and so forth. So, on what the government announced as far as the bank recap plan is concerned and this whole business of consolidation of the 27 public sector banks. How credible is this? Kidwai: You hit the nail on the head. I don't think consolidation is going to be an answer in the next 12 months but at least the direction has been set and the setting up of the banking bureau which has also been charged with some of these responsibilities will at least take us in the right direction and I share with Ashok the concern that Rs 25,000 crore is still too little in the full context of Rs 1.82 lakh crore that is required and we will need to address this. However we need to give the government kudos for tackling this at many levels. The attempt to get the bankruptcy law in, the attempt to embrace some of the restructuring and NPA resolution through the Sarfaesi Act and to look at resolution of these issues in a manner and the way they have done in roads where if indeed 85 percent of all the stalled road projects have been sorted through as the Finance Minister mentioned then this is clearly the way to go. So, it is about working through the NPAs even while we look to capitalise the banks but I do fear that on the capitalisation front more will be required and while the Finance Minister has very boldly said his stance behind that capitalisation the issue is that if the economy doesn't actually begin to tick back as is hoped where does that revenue come from. Maybe it comes from galvanising through the so called amnesty which is not an amnesty scheme, maybe it will come through disinvestment, privatisation but that is going to be a call which we may well see in the course of the year. Just on the disinvestment privatisation front we really do as a country have to look at this very seriously, not just for public sector banks but also across the board and this needs tackling, it is about strategic stake sales and we have to be brave enough to get out there and do what needs to be done. First time announcement on insurance companies, we shouldn't miss that, general insurance companies being listed could have an element of disinvestment in there if it is not just fresh capital and that might garner money quite quickly in the course of the year as well. So, there are some very interesting threads here and I do hope that with the investment cycle that is looked at through government expenditure and through the rural, therefore consumption demand coming back growth begins to happen even while the government looks to raise revenues in the earlier part of the year. A very tough balancing act and I do hope one that we can end with the same optimism that we are entering the year with. Q: Lets talk about the energy cess or the green cess as it is now being called on coal and that could actually mop up to the tune of about Rs 26000 crore for the government. What does it mean, the power minister speaking to me says it will only mean about 12 paise per unit in additional cost but overall what would the Budget really mean for somebody like you? Sinha: There isn’t anything specific in the Budget for the clean energy sector itself. Having said that a lot of things have happened before the Budget was even presented. In the 2 or 3 months leading up to the Budget the cabinet actually allocated Rs 5000 crore out of the National Clean Energy Fund for a roof top programme and another Rs 5000 crore for a viability gap funding programme for the National Solar Mission. So, a lot has actually happened. In terms of this actual specific fund that you are talking about, it was earlier called the National Clean Energy Fund now they are calling it the National Clean Environment Fund. So, they have actually changed the terminology a little bit. Therefore they will also change the usage of the funds and broaden it out to include things like cleaning the Ganga and all of those kinds of programmes I think as well and that is a very deliberate attempt on the part of the government to actually include more broader focus within that. You have rightly said they are actually going to get about Rs 25-26000 crore into this fund and that is a fairly large number and that is going to be every year. So that gives a lot of flexibility to the government to do a variety of things under that programme. Now how much of it comes to the energy sector, hard to say. I think it will be dependent upon programmes that are presented by the ministry to the cabinet and then the cabinet approving it and so on. However certainly t he corpus is there for doing a lot of different and interesting things potentially. The other thing is that if you look at not just the clean energy fund but there is also a separate environment focus now much stronger in the government and we were just discussing earlier that even for companies like NTPC and lot of the other power producers there are certain environmental standards that they now have to meet which will actually mean that they have to spend a fairly significant amount of new capex on older plants as well. So, there is the desire to start trying to look at the environment a little bit more broadly and to raise funds from different areas. In addition to that they have also levied this infrastructure cess on cars. We don't know exactly how that is going to be spent but it could be spent on road building for example but it could equally be spent on trying to ensure a better movement toward the higher emission standards for cars or even for example on other environment activities. So, the government has actually created a number of mechanisms to actually collect funds from different cesses now which can be spent in multiple different positive areas.