Sinha disappoints corporates

The major proposals which dampened the spirit of corporates are the 10 per cent surcharge on corporate tax, Re one hike diesel prices and lack of any incentives even to recession-hit industry segments. The only industry segments which will directly benefit from the budget are pharmaceuticals, software, housing and fast moving consumer goods companies. This is also reflected in the rise in share prices of these companies.

Says Chief Executive and MD of Larsen amp; Toubro, S D Kulkarni: quot;Though there was concern about recession and many industries like steel and cement are down in the last two years, the budgethas done nothing that would spur industrial activity or production. It is good there has been some rationalising of duties. But there is nothing by way of investment or creating demand.quot;

FICCI president Sudhir Jalan also echoed a similar sentiment. 8220;When the FM began his speech, we saw a ray of hope. We thought his intentions were good. We welcome the measures he has taken on housing, for the capital market, to downsize the government expenditure, the proposals for divestment, but he has kept silent o several issues. And this silence is deafening. The increase in direct tax by levying a surcharge of 10 per cent on individual has simply reversed the process in the country of reducing the tax burden.

He has made no efforts to revive the economy by spending on infrastructure, and that8217;s very sad,8221; Jalan said.

8220;The budget is a disappointment, especially in light of the current state of the economy. This will lead to a tailspin from the current situation and land us with major problems. The excise dutyrationalisation and import duty reduction across the border will hurt the industry,8221; said G P Goenka, chairman, Duncan Limited.

However, CII president Rajesh V Shah was optimistic. 8220;Presenting his second Budget within nine months, the FM has set the stage for the second phase of the reforms process. The budget proposals would certainly signal a strong positive direction and bring the feel good factor back into the economy.8221;

Thomas Cook India chairman Pradip Madhavji criticised the finance minister for ignoring the tourism sector after declaring 1999-2000 as quot;Visit Indiaquot; year. quot;I was expecting a lot of boosters. But tourism sector was completely ignored. This is not a welcome trend. If the government is serious enough in its commitment towards employment generation, tourism sector, which is a significant foreign exchange earner, would have been given lot of concessions,quot; he added.

Exporters were also disappointed. 8220;Though the minister mentioned revitalising exports as one of the six areas of majorfocus of the budget, the content of the overall budget proposals does not reflect this objective,8221; said Navratan Samdria, president, FIEO. quot;Disappointing,quot; this is how Shailesh Sheth, National Chairman on capital goods CII reacted when asked about the union budget. 8220;Key to capital goods sector growth is confidence. The budget could not provide even a semblance of that. How can one expect automobile sector to be cost competitive without favorable measures?8221; he questions.

The chairman of Premier Automobiles, Vinod Doshi, said that the automobile has not been given any incentive by the government despite most of the companies are hit by a downturn. quot;The budget appears to have totally ignored automobile sector. We have to read the fine print to get a clear picture,quot; he said. While welcoming the budget, the vice chairman of recession-hit Essar Steel, Ravi Ruia said more concentrated efforts on export promotion are requires since there is an urgent need to build up forex reserves.

Saying that the Budgethas fallen short of expectations, the chairman of RPG Group, Harsh Goenka, said no steps have been taken to generate demand which was necessary to give a kickstart for an immediate industrial recovery.8220; No doubt the incentives given to housing construction will help some industries like steel and cement. But a full scale revival of industry in the current year appears difficult. The surcharge on direct taxes will impose an additional burden on corporates and individuals, and reverses the trend set by reforms undertaken earlier,8221; Goenka said.

The Chairman amp; Managing Director of pharmaceutical firm Wockhardt, H F Khorakiwala said the budget would accelerate the process of synergies in organisations. 8220;Earlier, no one seems to have any idea about demergers. Now, tax implications are not there in the case of mergers and demerger,8221; he added

Said Raj Nair, Chairman, Business Consulting Group: quot;It is a disappointing budget which is long on numbers and short on strategy. Take for instance, public sectordisinvestment. We have the numbers of the disinvestment commission tearing their hair in frustration for two years and here is a finance minister waxing eloquent on the successful raising of Rs 8,000 crore in 1998-99 and his target of Rs 10,000 crore next year.quot;

According to Berjis Desai, corporate lawyer and senior partnear, Udwadia, Udeshi amp; Berjis, stipulating a time-limit for FIPB decision as well as providing for monitoring of foreign investment implementation will hopefully eliminate a cause for irritation to foreign investors. 8220;Automatic approval for all NRI/OCB investment is a logical culmination of the process of equating NRI investors with resident investors,8221; he said.

8220;This step, coupled with permitting NRI8217;s to trade on stock exchanges through terminals abroad, will open up intresting structuring possibilities for FIIs and foreign investment banks. The new Gold Deposit schemes is a much-anticipated and welcomes step. However, the RBI should now come outwith the necessary changes in theexchange control manual to enable Indian banks to effectively manage their risks byh the use of derivatives inclduing Gold-US dollar swaps,8221; Desai said.

V Shankar, Educationist amp; Secy of the South Indian Eduction Society, says that the education guarantee scheme evolved by the finance minister with provision for an elementary school within a radius of one km habitation is indeed a welcome step. 8220;As he expects 1.8 lakh schools to be created in the process, he has commenced the process of bridging the yawning gap. Kapil Wadhawan, executive director, Dewan Housing Finance Corporation Ltd, said the budget is one of the much-awaited for the housing industry, which will help in adding impetus the economic growth.

Wadhawan praised the finance minister for implementing the majority of recommendations put forth by the housing finance industry. The increase from one lakh dwelling units of rural housing finance scheme to 1.25 lakh is a right decision in light to develop the housing stock in rural sector.

DewanHousing has played a significant role in participation under this scheme. Rural Housing has been the major thrust area of DHFL operations and during the current year, the company has already crossed the target of rural housing given by the apex body.

The Managing Director, Rabo India Finance Pvt Ltd, Rana Kapoor says that a strategic boost to a hitherto neglected agriculture sector has been provided through a combination of significant measures announced by the finance minister.Vijay Kalantri, president, AIAI, said the budget lays emphasis on the revival of the capital market, restructuring, amalgamation of companies and provides impetus to mutual funds, rationalisation of capital fund and has further shown his intention in reducing deficit in addition to downsizing the government.

V B Haribhakti, former president, Indian Merchants Chamber, said it is most quot;appropriatequot; budget. There is a sincere attempt to tackle the problems affecting the country8217;s economy. The initiatives proposed in the field ofagriculture, human development, education, housing, rural industrialisation etc are extremely well conceived.