Industrialists give thumbs up to interim budget
Members of the Federation of Indian Chambers Of Commerce and Industry (FICCI) applauded the interim budget presented by Finance Minister, P Chidambaram, and welcomed the changes introduced in it on Monday in New Delhi.
The government announced a package of indirect tax cuts to breathe life into spending and investment, and trumpeted its record of growth and reform over the past decade in its last budget before an election it looks set to lose.
Amid uproar in parliament as lawmakers shouted him down, Chidambaram also announced that he would contain the fiscal deficit for 2013/13 (April-March) at 4.6 percent of gross domestic product (GDP), below his target of 4.8 percent.
Indian businessmen watching the speech were further cheered by his estimate that the fiscal deficit would shrink further to 4.1 percent in 2014/15.
"I think it's very heartening that the fiscal deficit was contained below what was promised, and the future direction also seems to be good. The Current Account Deficit (CAD), including whatever we were hearing even a few weeks ago, it is even lower than that; so to that extent it is good," said FICCI President, Sidharth Birla.
Birla was visibly pleased that Chidambaram had covered almost all topics to be raised by industrialists, especially manufacturing sector, in the interim budget.
"He talks about financing with foreign direct ECBs (European Central Bank), FIIs (foreign institutional investors) and therefore the need to have a regime, which is protective of capitals of all kinds including foreign capital. He talks about inflation, very nice to see that balance between inflation and growth infrastructure, manufacturing. I think all the areas that FICCI would be talking about; talks about modern tax laws, GST (goods and services tax), he requested the next government to look at these," Birla said.
Chidambaram said that the Forex reserves are expected to rise by $15 billion by end of 2013/14.
Businessmen said they were happy that Chidambaram did not use populist measures ahead of the elections, which they feared he would.
"I think that the one good thing is that many people expected that this being vote on account just before the elections, there could be a tendency to introduce populist measures. But I think he has held himself back amidst being a very, very professional and positive thing on that count that we have not seen a huge expansion or indications on that side, including for the coming year," said Birla.
Chidambaram, struggling to deliver his speech above the din of lawmakers angry over a plan to divide Andhra Pradesh, announced no major changes in tax rates.
Chidambaram said, however, that growth would recover to at least 5.2 percent in the second of 2013/14 from 4.6 percent in the first half.
Chidambaram cut indirect taxes on cars and mobile phones in an effort to revive growth in the interim budget for the fiscal year 2014/15.
However, he said factory-gate taxes on some capital goods and consumer durables would be reduced to 10 percent from 12 percent, and excise duties on small cars, two-wheel and commercial vehicles would be cut to eight percent from 12 percent.
He also announced small-bore measures to soften student loans and help retired members of the Armed Forces.
Chidambaram also said that resurgence in exports, global economic revival and moderation in inflation point to better outlook for Indian economy in 2014/15.
(Posted on 17-02-2014)