Disappointed over the Budget,industry leaders today said the exercise to mop-up extra Rs 45,940 crore through indirect taxes will lead to further price rise and make it difficult for the RBI to cut interest rates.
There were more of negatives than positive tones from India Inc on the Budget proposals for 2012-13. The biggest concern was across-the-board hike in excise duty from 10 per cent to 12 per cent and levy of higher service tax on all but few items.
“…for the industry and the corporate sector all negatives…it is understandable but not acceptable,” Bajaj Auto Chairman Rahul Bajaj said.
Godrej Group Chairman Adi Godrej,Biocon CMD Kiran Mazumdar Shaw and J K Organisation Director Harsh Pati Singhania felt that increase in all-round taxes would lead to further inflation.
ICICI Bank MD and CEO Chanda Kochhar expressed doubt whether interest rates can be lowered.
“I am not hopeful that the RBI will be able to cut rates in April,” she said.
Ficci President R V Kanoria made no bones in criticising the Budget. “It is not going to stimulate the economy,” he said.
CII President B Muthuraman said he was expecting much more and the excise-related proposals would push up prices.
Assocham President R N Dhoot said he was expecting that the personal income tax exemption limit would be raised to 2.5 lakh per annum. “It is not done which is disappointing.”
After some initial positive reactions mainly on account of cut in securities transaction tax,the stock market too gave thumbs down to Finance Minister Pranab Mukherjee’s Budget as the Sensex declined by 210 points.
With inflation being close to 6.95 per cent in February,the industry fears that the Budget proposals would make it difficult for reversal of the trend.
Besides,as the Finance Minister in his Budget speech that the slowdown in the economy is mainly on account of a sluggish industrial growth,levy of additional excise and service taxes would further dampen the confidence.
Biocon CMD Kiran Majumdar Shaw expressed fears that the Budget would be inflationary.
Harshpati Singhania of J K Group shared similar views. Increase in excise duty will have inflationary implications,he said.
The government had fixed a fiscal deficit target of 4.6 per cent of Gross Domestic Product (GDP) for the current fiscal. But it has already overshot the estimates in January.
It is widely expected that the deficit for the current fiscal will be around 5.5 per cent.
“Deficit is still high which is disappointing. Things are going to become costlier for final consumer,” Godrej Group Chairman Adi Godrej said.