Indian Industry Welcome’s Jaitley’s Budget as Growth and Investment Oriented

By Sarkaritel February 28, 2015 21:19

Indian Industry Welcome’s Jaitley’s Budget as Growth and Investment Oriented

By TN Ashok   Economics Editor

New Delhi, Feb 28 : Indian industry and corporate honchos today welcomed the union budget for 2015-16 presented by Finance Minister Arun Jaitley as both growth and investment oriented with focus on job creation and social security.

Chandrajit Banerjee, Director General, CII, said the Budget 2015-16 meets the present requirements of the Indian economy and outlines a comprehensive vision for citizens with strong focus on growth, investment, job creation and social security.

A forward-looking, counter-cyclical, and pragmatic document, the Budget reassures investors and builds consumer confidence. CII is encouraged by the GDP growth target of 8-8.5 per cent for 2015-16, and fiscal consolidation at 3.9 per cent of GDP. The Budget would strengthen the investment cycle and build the savings pipeline while also channelising funds into much-needed infrastructure.

The Finance Minister has placed strong emphasis on public sector role to enhance capital investments through a slew of measures, including extending fiscal deficit targets for a year, adding resources from public sector enterprises and creation of a National Investment and Infrastructure Fund. CII had recommended tweaking of Real Estate Investment Trusts and Infrastructure Investment Trusts, revamping of Public Private Partnership modalities, and placing large projects for bidding after obtaining all clearances.

These are mentioned in the Budget and would help ‘crowd in’ private sector investments along with high priority accorded to ease of doing business. The steps to add money in the hands of consumers and build their future would add a lot of comfort to consumers and help expand the demand for goods and services. Industry looks forward to attaining the double-digit growth trajectory which is eminently attainable through the prudent navigation of Budget 2015-16.

“The FM has delivered a bold, far sighted budget that will help raise the country’s profile as an investment destination. It aims to make structural changes that will help drive higher corporate investment on a sustainable basis. These include the commitment to simplification and rationalization of the taxation structure and setting a clear roadmap of reform for the next four years. However, the short term impact arising out of increase in surcharge and service tax are matter of concern.

The move to encourage use of financial products and services among a larger proportion of the population as well as the efforts towards monetization of gold are great building block to build a vibrant and deep financial services sector. The government’s moves to encourage fund managers to relocate to India will also drive greater integration of the India into the global financial services economy.”

Rahul Bajaj, former president, CII and chairman, Bajaj Auto Ltd: This has been one of the best budgets in the recent past. Keeping in mind fiscal and other constraints it has done whatever a budget can do to promote savings, investment, and hence growth. Fiscal deficit for 2014-15 have been maintained at 4.1 % of GDP and for even 2015-2016, it has been kept at 3.9% only slightly higher than the 3.6% of the GDP which had been thought of. The finance minister has promised to bring down the deficit to 3% in three years’ time. Current account deficit for the current year is expected to be below 1.3 % of the GDP, but for this the FM has to thank reduced oil and other commodity prices.

Richard Rekhy, CEO, KPMG in India: “The Finance Minister has come out with a pragmatic Budget which is directionally focused at achieving growth and keeping the fiscal prudence in mind. The Focus is on Ease of Doing Business in India and increased infrastructure spend. Measures like New Bankruptcy legislation, startup entrepreneur’s funds, GST rollout by FY 2016, deferral of GAAR will definitely support the cause of Ease of Doing Business in India. “
Gautam S. Adani, Chairman, Adani Group: This budget is focused on ease of doing business, Make in India, infrastructure, social sectors. Introduction of GST from 1 April 2016 will definitely rejuvenate the industry and make manufacturing more competitive. This, coupled with clarity on GAAR deferment for two years and no retrospective applicability, comprehensive bankruptcy code, abolishing wealth tax act, merger of FMC with SEBI, rationalization of corporate tax from 30% to 25% coupled with review of deductions, etc. supports the Make in India campaign.

Suneeta Reddy, Managing Director, Apollo Hospitals Enterprise Limited: “Overall this has been a forward-looking and stable budget. By linking financial inclusion (Jan Dhan Yojna), social security and health insurance agendas, the Finance Minister has provided a holistic road map for greater access for all in the future. Specifically, the health exemptions provided for all and, in particular, for the elderly are a major positive.

The government has announced 5 new AIIMS, which will both increase access to health facilities in those stated and also provide a training ground for medical professionals. The visa on arrival for 150 additional countries is also a progressive move. This will go a long way in facilitating medical tourism, which is a growth industry that showcases India’s world class health facilities while contributing foreign exchange to the exchequer.

A lot more, however, needs to be done in terms of providing physical and educational infrastructure that supports the healthcare sector. This has to be done in partnership with and by giving incentives to the private sector that has been providing nearly 70% of the additional beds in India. We also welcome the road map for reduced corporate taxes starting in 2016 and the roll out of the GST, which is on track.”


Deepak Kapoor, chairman PwC India: Budget’s proposals are reflective of the Government’s intent to move towards double digit growth with its emphasis on ‘Make in India’, infrastructure development, ease of doing business and continued focus on social priorities and overall development needs of the country. Noteworthy measures include reduction in tax rates, stringent provisions to tackle black money, removal of ambiguity on taxation of indirect transfer, eliminating MAT on FIIs, providing pass through status to AIFs and REIT, deferral of GAAR, new bankruptcy framework and steps to develop startup ecosystem.

“The Finance Minister has presented a broad-based Budget focused on accelerating India’s inclusive growth. The Budget reiterates the major programs and initiatives that have been previously announced – Jan Dhan Yojana, Skill India, Swach Bharat, Make in India and Digital India.

The Budget retains the focus on financial inclusion, education, health and agriculture. It has increased focused on infrastructure development, housing and manufacturing in India. Overall, Budget 2015 is wide in its scope and takes into account the interests of diverse sections of society – middle class, farmers, youth, aged and the disabled. It endorses a vision of India where there is a house for every family with24 hour power, potable water, and all accessible by road, and where at least one member of the family is employed. And all by 2023, when India celebrates its 75th year of Independence. The FM also talked about building a better social security system for its citizens to provide financial security.
The budget talked about financial discipline, a monetary policy framework with RBI that will keep inflation at less than 6%, but look at possible double digit growth. The FM is looking at reducing the fiscal deficit to 3% but in three years’ time to release additional investments.

The focus on infrastructure and housing investments is good, as it will kick-start the economy and have a ripple effect across all Industries. The FM understands the need to kick start infrastructure projects through increased investments, the need to revitalize PPP with the GOI taking additional risk.”

“Overall, the budget is forward looking, progressive and practical, with a very clear direction for future. It reflects Government’s focus on increased investment in infrastructure growth and generating skill based employment. We welcome the changes in taxation policy, with the reduction in corporate tax over four years and rationalization of custom duty. The determination towards GST and the proposed implementation will boost the industry through the state of art indirect tax system. Efforts being made by the current government towards achieving its vision of ‘Make in India’ policy is evident in this budget and hopefully it will turn manufacturing in India into a more profitable and business-friendly proposition. Measures to curb black money, job creation through revival of growth and investment will benefit middle class tax payers.”

R MUKUNDAN, MD, Tata Chemicals
“The Finance Minister has set the direction for a balanced and inclusive growth emphasising on increasing agricultural productivity, farm income, increasing investment in infrastructure, manufacturing maintaining fiscal discipline as well as raising social spend. There is nothing specific announced for any particular industry including Chemicals & fertilizer  Industry, however, rationalizing subsidies is a welcome step and we look forward to its implementation. Reduction in customs duty on certain raw materials will help the manufacturers going forward. The proposal to reduce corporate tax from 30% to 25% over the next four years is a welcome step for the industry and is expected to boost investment as the tax structures simplify. Proposals underlined by Shri Jaitley under ease of doing business and the focus to support the startups will also go a long way in encouraging domestic manufacturing. Further, we also look forward to the implementation of GST,  further simplification of tax structures and  clarity on PPP opportunities in various sectors which will give a boost to the ‘Make in India’ campaign.”

We welcome this budget as it is positive, growth oriented and puts forth realistic roadmap to attain sustainable economic growth.

The government’s thrust on renewable energy is clearly visible in the target of achieving 175 GW by 2022.  India in the last 25 years India has done 34 GW and in the next 7 years we now have a target of 175 GW, comprising of 60GW wind energy which is an ambitious target for the industry and we welcome the move since it is in the right direction. The budget reiterates mission and vision of the government to achieve the following:

·         Affordable sustainable energy for all
·         Low carbon economy
·         Achieve energy security
·         Long term sustainable economy & sustainable jobs
The government’s commitment to green India manifests in some of the additional measures such as increasing the coal cess from Rs. 100 to Rs 200 thereby providing impetus to clean energy.

We appreciate the focus on providing impetus to the Make in India vision by giving clarity on taxes, definitive measures to ease of doing business in India and encouraging domestic and foreign direct investment. However, in our view to provide further stimulus for investment in captive renewable power by the manufacturing units, interest rebate should be given, which will also ensure success of Make In India.    Further, innovative financing measures such as infrastructure bond, creation of mudra bank for MSME sector also augurs well for Make in India. So overall we see the budget has provided several initiatives to boost manufacturing in India.

We are confident that the renewable energy in India will take off from here and witness exponential growth in the next few years and will power a greener tomorrow.

“This year the entire perception towards general budget has changed. Earlier, everyone used think mostly about what they will get directly out of budget. But now we think like if the budget is for betterment of the entire economy, it will be automatically become beneficial for my sector too.”

“The impetus given to R&D, incubation and entrepreneurship in this Budget is very heartening. So is the support for innovation through the Atal Innovation Mission. If administered well, these steps can act as a force multiplier for both “Make in India” and for employment generation.
The strong commitment for Housing for All and for the increased use of renewable energy are also welcome. Indian R&D, such as the work done at IIT Madras in these directions, can contribute significantly to meeting these challenging goals.”

“We are positive on the market borrowing program, the net borrowing is in alignment with market expectations. The government is looking to raise revenue through additional resources, which could be gold bonds.
“I think, overall, there are significant amount of growth multipliers embedded in the budget announcements through a sharper focus on expenditure.
“(On fiscal deficit) I think this is more tenable particularly when the government is wanting to reinvigorate public investments. I think this is more in alignment with government re-igniting investment led by its own programs. We believe to the extent that the government implements its investment program, it will be a positive.
“I think institutional strengths are getting more clarity here, with the announcement of the debt management office, the monetary policy framework, and GST.”

“I think this (higher fiscal deficit) was on the cards because the government had been making a case for public investment.
“I think this is a very sensible policy, given the fact that a lot of things are crimping the fiscal space available to the centre. And I hope and wish the rating agencies and the investor community in general, understand the rationale behind this.
“I think trying to stick to a 3.6 percent (fiscal deficit) target would be far riskier, in terms of ultimately ending up with low growth and having to slash expenditure further and getting into this vicious downward cycle that we have been in for the last couple of years, partly because of this fetishisation of a particular number of the fiscal deficit.

“Today’s budget was pragmatic, wide-ranging and inclusive given the emphasis on social safety nets. On the fiscal math, the deficit target has been set at -3.9 percent of GDP, deviating modestly from the roadmap’s target of -3.6 percent.
“But the government reiterated its commitment to medium-term consolidation by maintaining the -3 percent target, but delayed the timeline.
“We had flagged risks of a higher deficit target to accommodate realistic economic assumptions, higher public expenditure and increased devolution to states. The higher target is unlikely to attract the immediate ire of rating agencies and the markets, but will need the higher-frequency fiscal performance to back that faith.
“Rightfully, public investments have been given precedence to kick start the capex cycle, picking (up) the slack from the stressed private/corporate and banking sectors.
“Overall, the budget was positive, but we are uncertain if there will be any imminent rate reaction from the central bank.”

“This budget will be a good test case whether fiscal stimulus works or not.
“If growth picks up more than what is being anticipated by the government, then we can conclude that investment-led growth helps growth. But it is disappointing that fiscal deficit targets have been reworked, and it remains to be seen how successful the government will be in implementing that.”

“Markets were expecting a fiscal deficit target of 3.6 percent to be met in 2015/16, so the 3.9 percent number will be negative for the markets as an initial reaction on Monday.
“Also markets were not expecting the government to extend the fiscal consolidation roadmap by one year, and we were expecting fiscal deficit target of 3 percent of GDP to be met in 2016/17. But we have to see how this additional money coming out of the higher fiscal deficit will be spent.”

“I think there’s been endless controversy for corporates over the absence of a consolidated FII (foreign institutional investor) limit.
“I think it’s just making the process of investing in India and Indian companies that much easier. It is still very much a part of the larger scheme of making India an attractive destination and introducing transparency.
“The gold monetisation scheme has helped other countries like Turkey. I think it will work. It certainly will help foster one step to a more active gold market in India.

By Sarkaritel February 28, 2015 21:19