India Budget 2012: Reaction Roundup
New Delhi: Union Finance Minister Pranab Mukherjee on Friday unveiled India’s general budget for the next financial year that was seen as too modest for businesses expecting more concessions.
Analysts largely rated the budget as disappointing, noting the politically vulnerable government had avoided bold reforms, opting for cautious steps to cajole flagging growth and setting inadequate targets to rein in a gaping deficit.
Here is a round up of the reactions to the budget across various sectors
Confederation of Indian Industry (CII)
Welcome growth oriented budget, but increase in excise and service tax rate a concern.
Mahindra & Mahindra
Though there has been no big announcement on the rural side, the package of initiatives focusing on farm productivity, transportation efficiency, warehousing and micro-irrigation are all positive signs and augurs well for the economy overall as well as for Mahindra.
Specific to automotive industry, the industry is relieved that the FM did not take any retrograde step like imposing a tax on diesel vehicles.
The excise duty hike was in a way expected and we will have to pass on the price increase to the consumer. However, with all the surcharges and special levies, the top excise duty rate is as high of 29 percent.
For Mahindra vehicles, the price increase would be as low as Rs 3,000 to a maximum of Rs. 35,000 depending on the product category.
The inadequacy of the initiatives to provide the push to manufacturing, for achieving the targets laid out in the National Manufacturing Policy, of achieving 25 percent share of GDP in next 10 years is also a matter of concern.
General Motors India
The corporate sector expected at least retention of the existing excise tax structure for the growth of the auto sector as it started slowing down during the last one year due to high interest rates, fuel prices, commodity prices, negative market sentiments etc.
As far as the automotive industry is concerned, it did not meet the expectations. The industry did not expect any increase in excise duty on passenger cars. In fact, the industry expected the government to announce some other measures to fuel demand of vehicles which have also not happened.
Some of the other announcements made by the finance minister for the manufacturing sector, R&D activities, hybrid vehicles, skill development etc should help enhance the competitiveness of Indian industry and generate employment opportunities.
Similarly the concessions announced for environment friendly vehicles should help promote usage of green technology.
Auto Sector, Deloitte India
While the increase in the excise duty rates on large cars and customs duties on certain CBU’s would result in price increases, the fact that there are no additional duties on diesel vehicles would cheer car manufacturers who have invested in diesel models.
Infrastructure and Transport, Deloitte India
By allowing these infrastructure organisations to raise Rs 60, 000 crore through tax free bonds (100 percent increase over last year) the Finance Minister has provided required financial support to these organisations.
He also offered helping hand to ailing Airlines Industry by allowing raising ECBs, reduction in WHT as also some concessions in customs duty.
Jindal SAW & JITF
The announcement on development of urban infrastructure including metro rail projects, road building, comprehensive water management and sewage treatment plants in various cities in country, introduction of much awaited implementation of GST and the reduction on withholding tax on external commercial borrowings, airlines, roads, bridges, affordable houses and fertilizer sectors would foster the infrastructure sector’s growth.
Simplex Infrastructures
We as an infrastructure company welcome Minister’s proposal for the road sector, from targeting 8,800 km of road projects to announcing full exemption on imported equipments for road construction projects, this will have a hugely positive impact on the sector.
Further, increased allocation of 14 percent towards the NHDP is well appreciated.
The Private sector were facing further constraints in the past for lending from the banks, the announcement of liberalizing external commercial borrowings will ensure smooth access to the funds & provide us the impetus to bid for more projects.
Doubling of infrastructure bonds from Rs 30,000 to Rs 60,000 crore is a well thought out move for mobilizing the resources in the sector.
The only dampener for the infrastructure sector would be the increase in the service tax from 10 – 12 percent & and hike in excise duty to 12 percent, this negatively affects the growth prospects of the sector and can further result in higher costs for us.
MTS India
While many systemic elements have been set right in the 2012-13 Union budget, however the telecoms industry continues to face numerous challenges.
Increase in service tax from 10 percent to 12 percent would increase cost of ownership of a mobile phone. This becomes all the more significant for CDMA based mobile services which to a large extent services the telecoms needs of customers who are at the bottom of the pyramid.
With the national broadband plan envisaging 160 million broadband connections including 60 million wireless broadband connections by the year 2014, It would have been good, if this growth path would have got some support through easing of taxes on Internet and broadband services.
Gujarat NRE Coke
Disappointment for having no impetus to growth and the budget is simply an accounting statement. We have lost an opportunity to make a strong statement which could have allowed us to come out of hibernation and re-instill trust by removing some of the ethical deficit that has been increasing our fiscal deficit beyond our control
Confederation of Real Estate Developers’ Associations of India (CREDAI)
We demanded tax rebate under Section 80 IB (10) and also extension of completion period for the projects approved after 1st day of April 2005 by two years as the economic slowdown hit almost all the projects launched during that period.
There is no word on the same in the Union Budget. Our long pending demand of an infrastructure status to the real estate sector has also been turned down.
Moreover, application of TDS on the purchase and sale of property and increasing Service Tax by 2 percent will further add on to the overall cost of property and are bound to make property more costly in coming days.
Therefore, there is nothing to cheer about in Union Budget rather it is a matter of concern for developers and buyers as a whole.
It is actually a very disappointing budget and we hope Hon’ble Finance Minister will pay a more focused attention to ground realities of the real estate sector.
Tata Chemicals
For chemicals and fertilisers sector, the budget stresses on self-sufficiency over next five years in urea production, which is a welcome step.
Reducing the rate of withholding tax on ECB from 20 percent to 5 percent for 3 years is a positive one for the fertiliser sector. This will reduce the cost of borrowing for new investments.
Proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services is in the right direction.
Abolishing of customs duty on coal for next 2 years will have some positive impact on raw material costs.
Extension of 200 percent relief in R&D is a good move and will encourage Innovation Chemicals sector and benefit our Innovation Centre.
2 percent increase in standard excise rate and service tax is in line with our expectation and a right move towards adoption of GST.
Bharti AXA General Insurance
Getting the fiscal deficit down to 5.1 percent while predicting a 7.6 percent percent GDP growth looks very hard in the absence of a stronger path to reforms in the current macro-economic scenario both within & outside India.
From a general insurance perspective there is very little the budget offers. We were expecting more reforms especially on the enhancement of the 80D Income tax benefit with a lot more increment for senior citizens as well as removal of service tax for micro-insurance, senior citizen policies & women centric policies.
Max New York Life Insurance
Finance Minister's assurance that Insurance Amendment, Pension and Banking Bills will be presented in this session, shows his commitment towards reforms in financial services sector.
With respect to the life insurance sector the recommendations related to tax exemption under 80 C and 10 (10D) and increase in service tax would bear a substantial impact.
The service tax on first year premium would increase from 1.5 percent to 3 percent of the gross premium. This will result in having different amounts for the first year premium and renewal premium, thus resulting in administrative challenges.
World Gold Council
Whilst there may be a very short-term impact to demand for gold as a result of a further increase in customs duty on imports of gold to 4 percent from 2 percent, in the longer term, this increase will not substantially affect demand.
Gems & Jewellery Export Promotion Council
FM has announced one-sided measures to control the FOREX reserves of the country by making gold, colored stones and gems dearer for the consumer as a result the interest in buying gold jewellery and gold bars will also go down with the consumers having to pay more duties
The only benefit to the consumer seems to be the full exemption on branded silver jewellery from excise duty.
Gkboptical.com
The Budget is short on addressing key concerns of e-commerce sector like exemption from sales tax and VAT for online retailers etc. that are must to bring the e-commerce sector on a sustained high growth trajectory.
Also, the move to increase service tax from 10 percent to 12 percent is a dampener as it will discourage consumption due to increase in transaction cost.
Blue Dart Express
From a logistics perspective, the decision to boost the road infrastructure with 8,800 kms of roads being added during the coming fiscal is noteworthy.
Also, with direct import of ATF by airlines termed as end user consumption there has been some much needed relief from state VAT which ranges from 3 to 33 percent.
Linc Pens & Plastics
The budget could have been more dynamic & growth oriented. However, it was a relief to see nopopulist schemes and the government's resolve to keep central subsidies under 2 percent of GDP was appreciable.
The announcement of setting up of 6000 schools in the 12th Plan is welcomed.
Ferns N Petals
The budget aims at an equitable and sustainable growth which will act as a catalyst in specifically the growth of agriculture sector.
With the announcement of Rs 1,00,000 crore increase in the agriculture credit target to Rs 5,75,000 for the next fiscal and increase in the outlay for farm sector by about Rs 3,000 crore, this is a huge support to the backbone of the Indian economy.
But at the same time, we are hugely disappointed as there is no significant announcement for the Retail Industry. With the increase in service tax as well as excise duty slab, the ladder of inflation will shoot further.”
VLCC
The budget announcement for the financial year 2012-13 is not really on the lines we had hoped for. We are disappointed that the Budget has got nothing pertaining to the wellness sector.
However, as a constituent of the preventive healthcare domain, we are encouraged to note that there is a personal income tax rebate of up to Rs. 5,000 for health check-up.
Child Rights and You (CRY)
With at least 8.1 million children in 6-14 age group currently out of school, the allocation for the Sarva Shiksha Abhiyan (SSA) at Rs. 8292.64 crore is inadequate.
In the case of another important education scheme - Rashtriya Madhyamik Shiksha Kosh - the budgetary allocation for 2012-13 is Rs. 2811.60 crore.
Though this is an increase of 29 per cent from an allocation of Rs.2179.11 crore in 2011-12 (revised budget estimates), it still does not cover the shortfall created in the 11th Five Year due to less allocations in the five financial years of the 11th Plan.
The allocations for the Mid Day Meal for 2012-13 is Rs. 3707.55 crore which is an increase of only Rs. 838.47 crore from an allocation of Rs. 2869.08 crore from the revised budget estimates of 2011-12.
This does not even cover the shortfall in the allocations in the 5 years of 11th Five Year Plan, which was Rs. 9085.60 crore.
The gross budgetary support for 11th Five year plan was Rs. 48000 crore, whereas the allocations in those five years was only Rs. 38914.40 crore, resulting in a shortfall of Rs. 9085.60 crore.
New Delhi: Union Finance Minister Pranab Mukherjee on Friday unveiled India’s general budget for the next financial year that was seen as too modest for businesses expecting more concessions. Analysts largely rated the budget as disappointing, noting the politically vulnerable government had...
New Delhi: Union Finance Minister Pranab Mukherjee on Friday unveiled India’s general budget for the next financial year that was seen as too modest for businesses expecting more concessions.
Analysts largely rated the budget as disappointing, noting the politically vulnerable government had avoided bold reforms, opting for cautious steps to cajole flagging growth and setting inadequate targets to rein in a gaping deficit.
Here is a round up of the reactions to the budget across various sectors
Confederation of Indian Industry (CII)
Welcome growth oriented budget, but increase in excise and service tax rate a concern.
Mahindra & Mahindra
Though there has been no big announcement on the rural side, the package of initiatives focusing on farm productivity, transportation efficiency, warehousing and micro-irrigation are all positive signs and augurs well for the economy overall as well as for Mahindra.
Specific to automotive industry, the industry is relieved that the FM did not take any retrograde step like imposing a tax on diesel vehicles.
The excise duty hike was in a way expected and we will have to pass on the price increase to the consumer. However, with all the surcharges and special levies, the top excise duty rate is as high of 29 percent.
For Mahindra vehicles, the price increase would be as low as Rs 3,000 to a maximum of Rs. 35,000 depending on the product category.
The inadequacy of the initiatives to provide the push to manufacturing, for achieving the targets laid out in the National Manufacturing Policy, of achieving 25 percent share of GDP in next 10 years is also a matter of concern.
General Motors India
The corporate sector expected at least retention of the existing excise tax structure for the growth of the auto sector as it started slowing down during the last one year due to high interest rates, fuel prices, commodity prices, negative market sentiments etc.
As far as the automotive industry is concerned, it did not meet the expectations. The industry did not expect any increase in excise duty on passenger cars. In fact, the industry expected the government to announce some other measures to fuel demand of vehicles which have also not happened.
Some of the other announcements made by the finance minister for the manufacturing sector, R&D activities, hybrid vehicles, skill development etc should help enhance the competitiveness of Indian industry and generate employment opportunities.
Similarly the concessions announced for environment friendly vehicles should help promote usage of green technology.
Auto Sector, Deloitte India
While the increase in the excise duty rates on large cars and customs duties on certain CBU’s would result in price increases, the fact that there are no additional duties on diesel vehicles would cheer car manufacturers who have invested in diesel models.
Infrastructure and Transport, Deloitte India
By allowing these infrastructure organisations to raise Rs 60, 000 crore through tax free bonds (100 percent increase over last year) the Finance Minister has provided required financial support to these organisations.
He also offered helping hand to ailing Airlines Industry by allowing raising ECBs, reduction in WHT as also some concessions in customs duty.
Jindal SAW & JITF
The announcement on development of urban infrastructure including metro rail projects, road building, comprehensive water management and sewage treatment plants in various cities in country, introduction of much awaited implementation of GST and the reduction on withholding tax on external commercial borrowings, airlines, roads, bridges, affordable houses and fertilizer sectors would foster the infrastructure sector’s growth.
Simplex Infrastructures
We as an infrastructure company welcome Minister’s proposal for the road sector, from targeting 8,800 km of road projects to announcing full exemption on imported equipments for road construction projects, this will have a hugely positive impact on the sector.
Further, increased allocation of 14 percent towards the NHDP is well appreciated.
The Private sector were facing further constraints in the past for lending from the banks, the announcement of liberalizing external commercial borrowings will ensure smooth access to the funds & provide us the impetus to bid for more projects.
Doubling of infrastructure bonds from Rs 30,000 to Rs 60,000 crore is a well thought out move for mobilizing the resources in the sector.
The only dampener for the infrastructure sector would be the increase in the service tax from 10 – 12 percent & and hike in excise duty to 12 percent, this negatively affects the growth prospects of the sector and can further result in higher costs for us.
MTS India
While many systemic elements have been set right in the 2012-13 Union budget, however the telecoms industry continues to face numerous challenges.
Increase in service tax from 10 percent to 12 percent would increase cost of ownership of a mobile phone. This becomes all the more significant for CDMA based mobile services which to a large extent services the telecoms needs of customers who are at the bottom of the pyramid.
With the national broadband plan envisaging 160 million broadband connections including 60 million wireless broadband connections by the year 2014, It would have been good, if this growth path would have got some support through easing of taxes on Internet and broadband services.
Gujarat NRE Coke
Disappointment for having no impetus to growth and the budget is simply an accounting statement. We have lost an opportunity to make a strong statement which could have allowed us to come out of hibernation and re-instill trust by removing some of the ethical deficit that has been increasing our fiscal deficit beyond our control
Confederation of Real Estate Developers’ Associations of India (CREDAI)
We demanded tax rebate under Section 80 IB (10) and also extension of completion period for the projects approved after 1st day of April 2005 by two years as the economic slowdown hit almost all the projects launched during that period.
There is no word on the same in the Union Budget. Our long pending demand of an infrastructure status to the real estate sector has also been turned down.
Moreover, application of TDS on the purchase and sale of property and increasing Service Tax by 2 percent will further add on to the overall cost of property and are bound to make property more costly in coming days.
Therefore, there is nothing to cheer about in Union Budget rather it is a matter of concern for developers and buyers as a whole.
It is actually a very disappointing budget and we hope Hon’ble Finance Minister will pay a more focused attention to ground realities of the real estate sector.
Tata Chemicals
For chemicals and fertilisers sector, the budget stresses on self-sufficiency over next five years in urea production, which is a welcome step.
Reducing the rate of withholding tax on ECB from 20 percent to 5 percent for 3 years is a positive one for the fertiliser sector. This will reduce the cost of borrowing for new investments.
Proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services is in the right direction.
Abolishing of customs duty on coal for next 2 years will have some positive impact on raw material costs.
Extension of 200 percent relief in R&D is a good move and will encourage Innovation Chemicals sector and benefit our Innovation Centre.
2 percent increase in standard excise rate and service tax is in line with our expectation and a right move towards adoption of GST.
Bharti AXA General Insurance
Getting the fiscal deficit down to 5.1 percent while predicting a 7.6 percent percent GDP growth looks very hard in the absence of a stronger path to reforms in the current macro-economic scenario both within & outside India.
From a general insurance perspective there is very little the budget offers. We were expecting more reforms especially on the enhancement of the 80D Income tax benefit with a lot more increment for senior citizens as well as removal of service tax for micro-insurance, senior citizen policies & women centric policies.
Max New York Life Insurance
Finance Minister's assurance that Insurance Amendment, Pension and Banking Bills will be presented in this session, shows his commitment towards reforms in financial services sector.
With respect to the life insurance sector the recommendations related to tax exemption under 80 C and 10 (10D) and increase in service tax would bear a substantial impact.
The service tax on first year premium would increase from 1.5 percent to 3 percent of the gross premium. This will result in having different amounts for the first year premium and renewal premium, thus resulting in administrative challenges.
World Gold Council
Whilst there may be a very short-term impact to demand for gold as a result of a further increase in customs duty on imports of gold to 4 percent from 2 percent, in the longer term, this increase will not substantially affect demand.
Gems & Jewellery Export Promotion Council
FM has announced one-sided measures to control the FOREX reserves of the country by making gold, colored stones and gems dearer for the consumer as a result the interest in buying gold jewellery and gold bars will also go down with the consumers having to pay more duties
The only benefit to the consumer seems to be the full exemption on branded silver jewellery from excise duty.
Gkboptical.com
The Budget is short on addressing key concerns of e-commerce sector like exemption from sales tax and VAT for online retailers etc. that are must to bring the e-commerce sector on a sustained high growth trajectory.
Also, the move to increase service tax from 10 percent to 12 percent is a dampener as it will discourage consumption due to increase in transaction cost.
Blue Dart Express
From a logistics perspective, the decision to boost the road infrastructure with 8,800 kms of roads being added during the coming fiscal is noteworthy.
Also, with direct import of ATF by airlines termed as end user consumption there has been some much needed relief from state VAT which ranges from 3 to 33 percent.
Linc Pens & Plastics
The budget could have been more dynamic & growth oriented. However, it was a relief to see nopopulist schemes and the government's resolve to keep central subsidies under 2 percent of GDP was appreciable.
The announcement of setting up of 6000 schools in the 12th Plan is welcomed.
Ferns N Petals
The budget aims at an equitable and sustainable growth which will act as a catalyst in specifically the growth of agriculture sector.
With the announcement of Rs 1,00,000 crore increase in the agriculture credit target to Rs 5,75,000 for the next fiscal and increase in the outlay for farm sector by about Rs 3,000 crore, this is a huge support to the backbone of the Indian economy.
But at the same time, we are hugely disappointed as there is no significant announcement for the Retail Industry. With the increase in service tax as well as excise duty slab, the ladder of inflation will shoot further.”
VLCC
The budget announcement for the financial year 2012-13 is not really on the lines we had hoped for. We are disappointed that the Budget has got nothing pertaining to the wellness sector.
However, as a constituent of the preventive healthcare domain, we are encouraged to note that there is a personal income tax rebate of up to Rs. 5,000 for health check-up.
Child Rights and You (CRY)
With at least 8.1 million children in 6-14 age group currently out of school, the allocation for the Sarva Shiksha Abhiyan (SSA) at Rs. 8292.64 crore is inadequate.
In the case of another important education scheme - Rashtriya Madhyamik Shiksha Kosh - the budgetary allocation for 2012-13 is Rs. 2811.60 crore.
Though this is an increase of 29 per cent from an allocation of Rs.2179.11 crore in 2011-12 (revised budget estimates), it still does not cover the shortfall created in the 11th Five Year due to less allocations in the five financial years of the 11th Plan.
The allocations for the Mid Day Meal for 2012-13 is Rs. 3707.55 crore which is an increase of only Rs. 838.47 crore from an allocation of Rs. 2869.08 crore from the revised budget estimates of 2011-12.
This does not even cover the shortfall in the allocations in the 5 years of 11th Five Year Plan, which was Rs. 9085.60 crore.
The gross budgetary support for 11th Five year plan was Rs. 48000 crore, whereas the allocations in those five years was only Rs. 38914.40 crore, resulting in a shortfall of Rs. 9085.60 crore.
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