Corporates8217; guarded welcome

MUMBAI, June 1: Even as the chambers of commerce and industry welcomed Sinha's maiden budget saying that it will quot;kickstartquot; the e...

MUMBAI, June 1: Even as the chambers of commerce and industry welcomed Sinha8217;s maiden budget saying that it will quot;kickstartquot; the economy, many businessmen have given a thumbs down to the Union Budget presented by the finance minister today. quot;Not bold enough,quot; summed up Shekhar Datta, former president of Confederation of Indian Industry soon after the Budget announcement.

But his successor at the CII president Rajesh V Shah stated that the budget would help in restoring the investors confidence and lend the economy a status of a strategic value-adding partner in the region. Ficci president K K Modi summed up industry8217;s feelings when he said quot;We were expecting the worst. But the finance minister has presented a development-oriented budget rather than the nuclear budget which was expectedquot;.

Assocham hailed the budget as quot;pragmatic and bold, under the present difficult circumstancesquot; but pointed out that the budget did not give any indication to revive the capital market. The increase in petrol prices mayhave a cascading effect at a time when there is a slowdown in the industry, the chamber said. Also, the additional levy of excise duty to the order of nearly Rs 5,000 crore may adversely affect the certain segments of the industry, it added.

Stock markets reacted sharply 8212; Sensex fell by 152 points 8212; as the budget proposals failed to meet market expectations. quot;The petrol price hike will trigger inflationary pressure on the economy,quot; said an industrialist.

Shah said that the union finance minister has initiated a number of bold decisions to bail out the economy from the current slowdown. He said the increased outlay in infrastructure, plan outlay on energy, transportation, communication, housing and roads would vastly improve the situation and get back the economy on a seven per cent plus GDP. quot;Thanks to hike in duties, input costs will go up. Prices will ultimately depend on what the markets can bear. Additional duties on petrol will cause inflation while fiscal deficit will not be of much help incontrolling the inflation. The main thurst of the buidget is on infrastructure especially of the power, road and telecom sector,quot; he said.

The president and managing director, Premier Automobiles Ltd, Arvind Doshi, said the imposition of Re 1 per litre on petrol including the excise hikes for road development is a negative step taken by the finance minister as there was no guarantee whether the revenue collected through this cess would be allocated for road development. quot;The general experience has been that such revenue was diverted elsewhere,quot; he said.

Welcoming the budget, R K Pitamber, president of Bombay Chambers of Commerce and Industry BCCI said that opening up of the insurance sector as well as PSU disinvestment upto a cap of 26 per cent have been addressed favourably.

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The government8217;s new import duty cushion came in for varying reactions from the corporate sector immediately after the budget. While some senior industry leaders lauded the move, others criticised it as beinganti-competitiveness. V N Dhoot, chairman, Videocon group summed up the emotions of the supporters of the move when he said: quot;This is a Swadeshi budget for Swadeshi industries. Hike in import tariffs is a welcome step as it will help domestic industry.quot;

S D Kulkarni, MD and CEO of Lamp;T supported the imposition of 8 per cent special additional import duty.

The president and director steel firm, Mukand Ltd, Sukumar Shah said: quot;Expenditure has not been controlled and there was no deep cut on subsidies. There is every likelihood to lead inflation and eight per cent across the board hike is retrograde. There appears to be ad hoc in too many areas and there was no thrust on exports and savingsquot;.