Corporate India displayed a sense of cautious optimism about Budget 2005, which kept the reforms process on the road. While the Budget is far from losing its relevance, India Inc says that it’s evident that the reforms process will continue apace — and throughout the year.The big-bang measures came from the reduced corporate tax and the Rs 10,000 crore special purpose vehicle (SPV) to boost infrastructure. On the other hand, many were unhappy about the general depreciation rate being reduced, but it is being viewed along with the reduction in the corporate tax rate, which will increase investable resources by 3 per cent of net.A positive is that the initial depreciation rate has been increased to 20 per cent, giving an impetus to investments for modernization and quality purposes. ‘‘It’s a good budget with a long-range focus which is likely to stimulate demand as well as investment. The nation would benefit if the government can ensure the implementation of its urban and social infrastructure projects,’’ says B Muthuraman, managing director of Tata Steel.Corporate leaders are happy that the budget come out with some good news inspite of the Left’s vocal agenda. V.N. Dhoot, Chairman, Videocon Group said ‘‘The budget should satisfy the Left partners in the coalition, the IMF/World Bank and foreign direct investors.though the speech made no reference to the labour reforms that industry needs to achieve the envisaged growth.’’The Rs 10,000 withdrawal tax, however, was a big dampener. So was the fringe benefit tax. Says Ishaat Hussain, Finance Director, Tata Sons Ltd: ‘‘How can individuals/corporates be taxed for keeping their money in the bank, which has already been taxed once?.’’ The fringe benefit tax also came under fire. Says Adi Godrej, chairman of Godrej Industries: ‘‘The fringe benefits tax is laid out unfairly and perhaps unconstitutionally. It imposes a tax on expenditures incurred for genuine business purposes. Such a tax needs to be restricted only to actual fringe benefits.’’ The lowering of the depreciation rate was not liked by industry leaders. ‘‘One hand is taking away what the other hand gives,’’ says Anand Mahindra, vice chairman amd MD of Mahindra & Mahindra. ‘‘This will make things harder for those companies who want to make capital investments and investments in technology,’’ he adds.Among the good measures, corporates say increased focus on infrastructure, creation of special purpose vehicle to improve urban infrastructure like airports, roads and railways will go a long way to maker life better for the common man. ‘‘What is more important than announcement is that we implement these steps,’’ says A K Jain, Executive director of ACC.There were others who said the Congress cannot make any big-ticket announcement till it has Left party as a partner. The government’s stance on disinvestment or the opening up of the insurance sector will now have to be looked at outside the Budget.Many corporates hailed that infrastructure-specific sectors will benefit from the budget. Like, cement, steel (in spite of excise duty hike of 4 per cent) and construction due to huge amount allocated to create ports, airports and improve urban infrastructure.
