Good and Positive Budget - Mr. Bala Reddy , CMD, ICSA India Ltd.
We think the FM has come out with a good and positive budget for the year 2010-11.
The fact that the economy is on a recovery path is ascertained by the GDP growth estimates of 7.5% and the FM is positive in achieving a double digit growth rate.
This budget has not only given clarity on the short- tem fiscal issues but also has shown a direction for the medium term. On the macro level pegging the fiscal deficit at 5.5% for FY 11 is a very positive sign which has also been accepted by the markets. A forward guidance of progressive reduction in the fiscal deficit figures to 4.8% in FY12 and further to 4.1% in FY13 is a welcome while it is certainly sets a developmental trigger in the economy.
The budget has taken adequate care in a striking a balance between initiating the roll back on the stimulus package at the same time facilitating growth in the recovery times.
While there was a revenue loss from the direct taxes which is more of a continued developmental measure, the indirect taxes lead the net revenues gain. Additionally, the plan to raise Rs. 25000 cr. from disinvestments in state-owned companies is an achievable target.
The budget has a potential for saving for the salaried people as a part of the pruning of direct taxes and reduction in corporate surcharge by 2.5% while restoring corporate income tax rates is a welcome. The hope to implement the direct tax code and GST from April 1 2011 is definitely a progress in implementing tax reforms. The increase in Excise duty and restored service taxes are in line with the expectation and the economy has taken these steps positively.
The budget has reinstated its focus on the developing infrastructure sector by allocating 1.73 lak cr. and much more through other schemes. Similarly agriculture sector has also been assured support by providing extension of farm loans, concessions in import duties and domestic manufacturing, increase in funds for boosting production, loss reduction, availability of credit and food security measures. Rural development and education have also been focused by increasing allocation.
Similarly, planned allocation has been increased in power industry to Rs. 5130 cr excluding RGGVY, which benefits companies like ICSA. The impetus on clean energy sector continues which is evident from the sops announced for renewable energy. Efforts for further development is also strengthened by setting up of a national clean energy fund to drive research and develop technology.
New bank Licenses to private players and to eligible NBFC''s will bring in new products and services to the banking and financial services market place, similarly, providing funds to maintain tier 1 capital for public sector which is a considered to be a positive. Weighted deduction on R&D bring is some relief for Pharma industry. The scratch caused by the budget is in increasing the MAT that might be a bit of a disappointment for FMCG and Pharma sectors while Cement, petrol, cigarette industries would see the effect of a price hike due to increase in Excise duty.
On a consolidated note the budget is pro-development and has largely focused on strengthening Agriculture, Infrastructure, Education and Power on the sector front, created a room for savings for taxpayers, while increased the revenue for the government by adjusting indirect taxes. |
Union Budget