‘Realistic' budget receives cautious welcome

Dubai The Indian business community has cautiously welcomed their country's ‘realistic' budget, announced by Finance Minister Pranab Mukherjee.

A more populist budget could be expected next year when the government faces the public in the next parliamentary elections due in 2014.

"I agree with Pranab Mukherjee's quote that "sometimes painful treatments are necessary for long-term happiness" and this is reflected in some of the "not so popular" steps like controlling subsidies, the hike in excise and service taxes, etc, while keeping corporate tax rates intact," heavyweight Indian businessman Yousuf Ali MA, managing director-EMKE Group and a board member of the Abu Dhabi Chamber of Commerce and Industry, said.

This year the government has given priority to the challenging issues, he said.

"This is a realistic budget given the fact that India also has a lot of fiscal challenges as has the rest of the world. I look at four sectors — capital markets, agriculture, infrastructure and aviation — where the finance minister has laid great emphasis."

Their reaction somewhat echoed the mood in India's stock market where the benchmark index Sensex dived more than 200 points yesterday.

Dr J.R. Gangaramani, president and executive chairman of the Al Fara'a Group, said: "This is a difficult economic year and the finance minister has done his best to balance growth perspectives with the social perspective. This year's budget fell far short of industry's expectations and no path-breaking reforms nor major new policies were announced."

Bold initiatives

Paras Shahdadpuri, Chairman, the Nikai Group of Companies and immediate past president of IBPC, said: "Bold initiatives are required in the fields of infrastructure, industrial growth, controlling fiscal deficit, taming inflation, stopping massive theft of power and energy, the shameful wastage of food grains rotting in the warehouses, just to name a few.

"For this, political will and ability, strong governance, determination to execute the stated policies and therefore credibility are the key mantras."

Rizwan Sajan, Chairman of the Danube Group, termed it "a pragmatic budget". The quality of disbursement of subsidies using IT infrastructure is also a good initiative, he said.

Jitendra Gianchandani, Chairman of the Jitendra Consulting Group, termed it a ‘status quo' budget. "The finance minister has followed up the principle of no-action management." Achieving a growth of 7.6 per cent will be a marathon task, it's not realistic, he said.

The transfer of offshore holding companies or overseas offshore transfer of assets of companies in India will be taxed retrospectively (since 1962), according to the budget.

"This is unjustified and shocking. Foreign institutional investors or FII and non-resident Indians (NRIs) will be taxed and it will further dent ‘brand India'," he said.

Sudhir Kumar Shetty, COO of Global Operations, UAE Exchange, said: "Overall, this is not a populist budget, but one with more emphasis on financial reforms."

Kamal Vachani, Director of the Al Maya Group, regional director of the Electronic and Software Council (ESC) and President of GOPIO, Dubai Chapter, welcomed the exemption of bank interest up to Rs10,000 (Dh731).

Sudesh Aggarwal, President of the Indian Business Leaders Forum (IBLF) UAE, has termed the budget "inflationary". "The common man will be adversely affected due to the increase in the indirect taxation."

S. Venkatesh, chairman of the Dubai Chapter of the Insitute of Chartered Accountants of India (ICAI) and managing partner of MCA Auditing, said: "It is more of a balanced and realistic budget rather than any reform-oriented or populist budget…This is not a game-changer budget."