Budget: Industry hails, economists differ, investors decry

New Delhi, July 6 (PTI) India Inc Monday cautiously
welcomed the Union Budget as a "job well-done" in trying
conditions, but investors reacted sharply to the high fiscal
deficit and limited divestment plans and sent the markets
tumbling by nearly 900 points.

Tax reforms including abolition of the Fringe Benefit
Tax, Commodities Transaction Tax and clear roadmap for GST and
steps for a nine per cent economic growth were seen as
positives by the corporate sector. However, increase in MAT,
the unchanged Securities Transaction Tax and specific sops for
sectors like housing and steel invited criticism.

"Hike in Minimum Alternate Tax (MAT) to 15 per cent and
no change in STT fell short of investors expectations. We were
also expecting withdrawal of surcharge on corporate tax,"
Manoj Choraria, a leading stock broker, said.

Planning Commission Deputy of India Chairman Montek Singh
Ahluwalia said that "it is a growth-oriented budget and there
is no need for further stimulus."

"The Finance Minister has done a tight rope walking over
a huge distance in a difficult situation," feels apex industry
association Federation of Indian Chambers of Commerce and
Industry (FICCI).

Economists expressed different views. Prof Jayati Ghosh
termed the budget as a "corporate budget" with no focus on the
"Aam Admi". It is unfortunate that social sector espcially
education has been neglected completely by the United
Progressive Alliance (UPA) government.

Govinda Rao, Member of PMEAC, said that it is a good
budget as the Finance Minister had little choice. Fiscal
deficit at 6.8 per cent is the main worry.

On the abolition of FBT, Rao said the tax should have
been simplified instead of scrapping it. Wheareas the STT
should have gone as any transaction tax is bad.

The industry, on the other hand, has appreciated the
efforts by the Finance Minister and termed the budget as
"daring", "wise" and "measured" budget escpecially at a time
when the fiscal deficit has soared to 6.8 per cent, growth has
slowed down to 6.7 per cent and the fact that international
markets have still not recovered.
"He (Mukherjee) has pretty much kept our expectations,"
Venu Srinivasan, President of leading industry body
Confederation of Indian Industries (CII), said.

The budget, which fell short of the market's
expectation, has not talked of the reforms the investors were
expecting, Avinash Gupta, Assistance Vice President Research
Equity, Bonanza Portfolio, said.

"Amongst many shortfalls in the budget, it was silent on
the timeline for tackling the fiscal deficit position of the
country," Dinesh Thakkar, CMD of Angel Broking, said.

Moody's, however, said that it was a moderate fiscal
budget which may not please all, but is a fair effort by the
government to address two important existing concerns --
boosting economic growth to nine per cent at the earliest
while promoting inclusive development. PTI SKB
RAI
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