New Delhi/Mumbai, Feb 26 (Calcutta Tube) Indian industry Friday hailed Finance Minister Pranab Mukherjee for a development-oriented fiscal budget for 2010-11 even while expressing some disappointment at the raising of Minimum Alternative Tax (MAT) and excise duties.
Industry has been demanding cut in MAT from the current 15 percent to 10 percent, while the government in the budget 2010-11 has increased it to 18 percent. MAT is a tax that has to be paid by the companies that are enjoying tax benefits or tax exemption under various schemes.
‘By and large, the finance minister has provided a stable tax and policy framework for the Indian economy to move forward. However, the industry is disappointed that the finance minister had raised the MAT rate from 15 percent to 18 percent when industry was demanding a cut down to 10 percent,’ said Harsh Pati Singhania, president of Federation of Indian Chambers of Commerce and Industry (FICCI) industry body.
He said the impact of excise duty hike across the board coupled with increase in excise duty on petrol and diesel will add pressure on the price line in current circumstances. However, he appreciated the need for some fiscal correction.
On introduction of Goods and Services Tax (GST) and Direct Tax Code (DTC) from April 1 next year, Singhania said the time given for introducing it was too little.
Another industry body, The Associated Chambers of Commerce and Industry of India (Assocham) said the finance minister has ‘performed the most balancing act under the given circumstances’ by partially rolling out the stimulus package.
‘The finance minister has performed the most balancing act under the given circumstances by partially rolling out the stimulus package and at the same time paid adequate attention for development of the social sector and more specifically so for the rural sector,’ said Swati Piramal, president Assocham.
She also welcomed announcements for bringing in more and more services under the purview of service tax by not tinkering with its existing ceiling rate of 10 percent.
‘The budget proposals will bring in more money in the hands of individuals as several good measures have been introduced in the Finance Bill in the form of tax reliefs to the general public,’ she said in a statement.
The Assocham also welcomed a deadline set for introduction of Goods and Service Taxes (indirect taxes) and Direct Tax Code.
‘These would be major tax reforms which will not only provide tax relief to people and industry but also help the government realize higher tax collections,’ she added.
Moon B. Shin, managing director, LG Electronics Indian Ltd., described the budget as a progressive one. He said: ‘With an impetus on high GDP growth, and laying down a roadmap for fiscal consolidation the government is putting down things in perspective when it comes to allocation of funds.’
Ankur Bhatia, the executive director of the Bird Group, said the budget for 2010-11 was definitely better than expected. ‘But our demand for the two-star and above hotel industry to be categorized as an infrastructure sector has gone unheard,’ he added. This needs urgent intervention as the country is already short of star category rooms across the country, he said.
Sudip Bandyopadhyay, group president, Spice Finance, said the net additional tax revenue generation of Rs.20,500 crore should definitely improve government finances and reduce the need for borrowing. ‘Overall the budget will prove to be a great catalyst for propelling India to the next level of growth,’ he said.
Ajay Srinivasan, Chief Executive-Financial Services, Aditya Birla Group, said: ‘The opening up the banking sector to Non Banking Financial Companies (NBFCs) and the private sector is a significant step towards further strengthening and broadening the banking sector to bring it closer to the commoners.’
Kapil Dev Singh, country manager of IDC India, a top IT intelligence and advisory firm, said: ‘The expectation of India achieving 10 percent growth in the near future points to the domestic market consumption being the key driver.’
Gaurav Dua, head-research, Sharekhan Ltd, said: ‘The finance minister has addressed the key issues of containing fiscal slippage and outlined a clear roadmap for the next three years. The net government borrowing programme for 2010-11 is also well under control and allays fears of crowding out of bank credit for the private sector.’
‘The tax proposals related to corporate and capital markets are benign and in line with expectation with no negative surprises. The thrust on reforms and announcement like banking licenses for private sector non-banking companies were unexpected positive moves,’ he stated.
Sanjay Bhatia, managing director, Hindustan Tin Works Ltd & MD Rexam HTW Beverage Can (India) Ltd, said: ‘The focus on food sector, thrust on food processing and reduction of post harvest food wastage, plus setting up of five more food parks is indeed welcome and will benefit agro industries in a big way.’