Corporate India always hankers for more.  But this time, they have reasons to be pleased with the budget proposals for 2008-09 where Finance Minister has done something for both consumption and capital expenditure - the twin drivers for the economy. The trade and industry, gave its thumbs up to the Budget 2008-09 terming it as “a comprehensive, balanced and growth-oriented budget.”

Varied beneficiaries

CII President Sunil Mittal said “the Finance Minister has managed to address the triple challenge of growth inclusiveness and sustainability very astutely. The budget proposals would go along way in building people and building India.”

“The beneficiaries of the budget vary from farmers to industry to the average salary earner. And all this without making the budget fiscally irresponsible,” he said.

The cornerstone of the budget has to be the obvious fillip that it would provide to consumption in the country and thereby pump up a demand led growth cycle, CII said.

Ficci President Rajeev Chandrasekhar said “this is a balanced budget that has taken care of both the growth of the economy and the political compulsions of our time.” He welcomed tax benefits proposed for income Tax payers saying this would now give more purchasing power into the hands of people and boost consumption.
Welcoming the decision to lower excise duties and across-the-board reduction in Cenvat rate from 16 to 14 per cent he said “this will give a boost to the manufacturing sector.” Assocham President V N Dhoot welcomed the proposals for laying the strong foundations for a sustained inclusive growth including double digit economic growth.

Mr Sushil Muhnot, Managing Director & CEO of IDBI Capital points out positive benefits to banking sector in terms of cleaning up of balance sheet of agri NPAs and higher disposable income – due to IT reduction — and lower excise duties to boost demand and growth.

Nearer home, Bangalore Chamber of Industry & Commerce (BCIC) and Federation of Karnataka Chamber of Commerce & Industry (FKCCI) have termed the budget as balanced, while Federation of Indian Export Organisations and Small Scale Industries Association feel their demands have not been met.

BCIC President John Panikar said the measure to reduce the general Cenvat rate from 16 pc to 14 pc is an excellent step which will help improve the manufacturing sector. “However, the IT sector badly needed some relief in view of the hardening rupee and the downward pressure on exports anticipated due to the global slowdown”, he said.

The raising of the short term capital gains tax to 15 pc will have negative impact on the already volatile capital market, he added.

On waiver of farm loans, Mr Panikar said while the sector required sustained efforts to launch and maintain a second green revolution, its impact on banks’ balance sheets and the fiscal front was worrisome.

Federation of Indian Export Organisation, Karnataka Chapter, is also unhappy. It’s president Ganesh Gupta said the budget has not addressed the problems faced by exporters in view of the appreciating rupee and stagnating traditional markets. “The proposal to provide zero rating of exports through the refund of states and local levies, exemption from FBT on genuine business expenses, exemption from all services taxes on services used during the course of exports to provide a level playing field to Indian exporters have not been considered”, he said.
Karnataka Small Scale Industries Association (Kassia) dubbed the budget disappointing.

“It is unfortunate that with all its significant contribution to the growth and prosperity of the nation the small industry segment stands disappointed with very little response to their high expectations for the future rapid growth”, Kassia president MCR Shetty said.  Even the increase in the threshold limit for Central Excise exemption has not been responded, he added.

FKCCI felt that the debt relief in agricultural sector, allocation of more funds to the textile industry will provide the necessary impetus to both the sector. Federation President S S Patil while welcoming the decision to reduce excise duty on pharmaceutical, small cars, two wheelers, composite machines, felt the increase in short-term capital gains tax will not boost the capital market sentiment.