Business Standard Jury: Union Budget 2015
BS Jury, Business Standard, 01 March 2015
KUMAR MANGALAM BIRLA
Chairman, Aditya Birla Group
Due to the massive electoral mandate and the fiscal gift of lower crude oil prices and low inflation, this Budget came with the burden of huge expectations. But any expectation of "Big Bang" had been tempered by the Economic Survey, which advocated a persistent, incremental and creative approach. The FM has managed to achieve a remarkable balance.
Reforms, such as the JAM trinity (Jan Dhan Yojana, Aadhaar identity, mobile) for effective subsidy delivery, rollout date for the Goods and Services Tax (April 2016), crucial tax reforms, and a huge tax devolution to the states. The latter means that 62 per cent of national tax revenues now reside with the states.
A choice of mega infrastructure push, levers to enhance ease of doing business, and crucial financial sector reforms all imply that the FM has triggered a multi-year sustainable growth trajectory for India.
MD & CEO, Infosys
The Finance Minister has reinforced the government's commitment to transform India by renewing its existing fabric - bringing in the ease of conducting business, transparency in policies and stability in the tax regime.
At the same time, the Budget also supports new initiatives that encompass incubation facilities for start-ups, technology-led innovations for flagship programmes such as Make in India and Innovate in India, along with purposeful programmes like the universal social security system and the anti-inflation monetary policy framework to tackle India's challenges.
Underlying this agenda is a strong foundation that supports inclusive growth and a demonstration of clear commitment to maintaining financial discipline and lowering the fiscal deficit to three per cent in three years.
MD & CEO, Hero MotoCorp
There are several pluses in this Budget which will hopefully set the tone and direction for the next five years. The infrastructure fix was much-needed, as was the impetus to Goods & Services Tax (GST). The significantly higher plan outlays for infrastructure, including roads, should eventually help industry produce and sell more efficiently.
Some directions on tax and deficit targets have been set all stakeholders will benefit significantly. What is also reassuring is the keenness to put more money into the purses of hard working Indians instead of handing out freebies.
Today, because of a surfeit of FTAs, duty free finished goods end up in India from South East Asia, even as domestic manufacturers struggle with duties high raw material and components. The effort to level the playing field, therefore, is reassuring.
CEO, Citi India
The Government has made clear its fiscal targets and attempted to evidence how these can realistically be achieved. On taxation, there is clarity on GAAR, both intent and the direction to widen our tax base and the reiteration of a clear desire to retreat from an adversarial tax regime.
There is also an aspiration to bring our savings rate back to 36 per cent and equally important, to commence the process of channelising savings into the financial system and in turn, to direct these increased flows into productive segments of the economy. Finally, there have been some very specific decisions for the reform of the banking industry, the health of which will be pivotal to fuel higher growth rates.
It is a statement that leaves one feeling that we are well on our way in achieving our two objectives: ease of doing business in India and a recovery to much higher levels of GDP growth.
As expected, Make in India was the flavour and it was heartening to see the government recognise the value of the impact being created by start-ups. The government's promise of bringing GST into play by April 1, 2016 will be a game changer as it allows friction free trade between states and simplifies the tax liabilities for small businesses that are using online sales channel. The asymmetric tax regimes followed by the states is one of the biggest challenges for companies as it impedes the growth of the e-commerce industry in India.
The announcement of innovation fund and skill promotion initiatives is a welcome step towards maximising the potential of internet driven businesses.
E-commerce in India has the potential to generate 10 million jobs in the next three years and this alone can propel the economy towards a double-digit growth.
MD, Godrej Consumer
A responsible and determined Budget, this achieves a good balance between fiscal consolidation and reforms. In FMCG, various initiatives announced should bring recovery back on track. More income in the hands of middle class consumers will increase consumption of branded goods and services. Incentives for rural India, increasing MNREGA and infrastructure development, will augment inclusive growth along 'Sabka Saath Sabka Vikas'.
'Make in India' and boosting sectors like manufacturing will guide much needed job creation. Focus on skilling, education and entrepreneurship, should provide the long-term backbone required to sustain this trajectory.
The definite timeline of April 2016 for the transformative GST is reassuring. This has to be successfully implemented. Other things remaining constant, it would add 2 per cent to GDP growth.
Stability, consistency and predictability of government policies create an investment climate is a necessary condition to attract investments. The Budget continues the growth momentum ushered by the new government.
The key takeaway from the budget is its focus on infrastructure, public investments and social security measures. Increased outlays on infrastructure development would be a key growth enabler for other inter-dependent sectors. The higher public investments will be a help for private investments too.
We expected measures that would have led to a stronger Indian resources sector, important for the Make in India vision such as re-establishment of tax parity to provide level playing field to domestic vis-à-vis imported crude oil. Export duty relief for Goa iron ore exports was another such expectation.
CEO, KKR India
Finance Minister Arun Jaitley delivered welcome messages in support of India's long-term growth, a renewed focus on funding infrastructure investment to increasing public investment in infrastructure to enforcing tax stability. These will go far in encouraging FDI.
If India is backing itself, foreign investors will take note. What additionally helps is allowing private equity, real estate and hedge fund investors to invest in alternate investment funds. While the market needs to assess the full implications, it underscores the government's focus on encouraging FDI.
Reducing corporate tax to 25 per cent over the next four years and pledging a tax regime that is internationally competitive will support businesses. Ongoing efforts to reduce tax uncertainty will only compel international investors towards Indian opportunities across asset classes.
CEO, Nomura India
Three particular aspects of strategic importance stand out. First, focus on reigniting the infrastructure cycle. Creation of the National Infrastructure Investment Fund and issuances of tax-free bonds will help reduce the burden on central government's balance sheet.
The need for the sovereign to bear a major part of the risk in the PPP model, corporatisation of ports and a plug-and-play model for infrastructure development are paradigm changes for this sector. Two, a longer term roadmap to reduce corporate tax rates with fewer exemptions will be a positive for private sector investments.
The hike in service tax rate is consistent with the plan to introduce GST from April, 2016. Third, higher tax devolution from the centre to states is a big positive. Studies have shown that the multiplier effect of state's spending is much higher.
The FM delivered a people-friendly Budget while not losing sight of the importance of boosting infrastructure. The focus was on creating social security in terms of accident insurance and pension at meager premium rates - these were the key measures for the middle-class and senior citizens.
The FM tried to rev up the capital expenditure cycle by enhancing the targeted fiscal deficit ceiling from 3.6 per cent to 3.9 per cent giving him an additional headroom of about Rs 36,000 crore. Aided by this fiscal space, Rs 75,000 crore of incremental expenditure on infrastructure is planned.
The overall emphasis in the Budget was making it easier to do business in India by plug-and-play tendering for large power plants and a similar model is envisaged to be followed for projects, in road, rail and ports sector. This could be a game-changer for India's infra companies.