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Budget 
Daring, job well done, says India Inc
 

New Delhi, July 6
India Inc sent out mixed reactions to 2009-10 Budget presented by Finance Minister Pranab Mukherjee here today with some saying it was good for the overall economy in the long run while the others saying it was a lacklustre Budget.

Fiscal expansion to push growth: FM
New Delhi, July 6
While announcing the Budget today, Finance Minister Pranab Mukherjee said: “I am sensitive to the great challenge of rising expectations of a young India. 

Govt expects to garner  Rs 35,000 cr from 3G
New Delhi, July 6
The government expects to garner as much as Rs 35,000 crore from the auction of third generation (3G) spectrum, Finance Minister Pranab Mukherjee said here today while presenting the Budget.


EARLIER STORIES



IT industry welcomes extension of tax holiday
New Delhi, July 6
The abolishing of Fringe Benefit Tax (FBT) would benefit the IT sector the most.

No funds for R&D in pharma sector
Hyderabad, July 6
The pharma industry has reacted with cautious optimism to the Budget, saying there were no big and bold moves for the sector though some of the announcements were interesting.

  • Apollo hails reduction of duty on cancer drugs

Farmers give thumbs up to Budget
Chandigarh, July 6
The pro-poor and pro-rural Budget has got a thumbs- up from farm economists, farmer leaders and agriculturists in the region. Hailing the Budget for its approach towards the ‘aam aadmi’, especially those in rural areas, they have welcomed the steps initiated to rev up the farm sector.

Sensex tanks 869 points
Mumbai, July 6
The Sensex fell 869 points as investors disappointed with the Budget fled the markets. The benchmark index, which opened in the green ahead of the Budget, fell to a low of 13,959.44 before closing at 14,043.40. In the broader markets, the Nifty fell 258.55 points to close at 4,135.70.





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Budget 
Daring, job well done, says India Inc 
Girja Shankar Kaura
Tribune News Service

New Delhi, July 6
India Inc sent out mixed reactions to 2009-10 Budget presented by Finance Minister Pranab Mukherjee here today with some saying it was good for the overall economy in the long run while the others saying it was a lacklustre Budget.

Industry think-tank CII said the Budget addressed key priorities of the economy and focused on inclusiveness, economic revival and tax reforms.

Welcoming the Budget, Chandrajit Banerjee, director-general, CII, said the proposal to expand the NREGP through increased allocation of 144 per cent and overall increase in allocation for agriculture and rural sectors was good.

The Budget proposals with focus on retaining the excise duty and service tax rates, incentivising investments, focus on infrastructure investments and boosting consumption through increasing exemption limits on personal income tax are also welcome steps towards reviving the economy, he said.

Tax reforms measures such as abolishing FBT, CTT and announcing the implementation of dual GST by April 2010 are welcome and these measures would lead to simplification and greater tax compliance, he added.

The other industry mouth-piece FICCI said: “The Finance Minister has done a tightrope walking over a huge distance in a difficult situation - of a large fiscal deficit and a steep fall in growth rate. And he has done a good walk. It is a daring budget and a job well done in the most trying circumstances.”

Harsh Pati Singhania, president, FICCI, said: “The Finance Minister has placed his faith on growth. He has provided a stable tax framework with some reforms and simplification of procedures. He has not attempted an outright correction on the fiscal front which could have set back growth at this stage.”

“The Finance Minister’s growth strategy relies on three triggers - higher investments, leaving more money in the hands of consumers and increasing agriculture production to hold the price line. Such a comprehensive approach will help India return to the nine per cent growth trajectory soon”, he said, adding that overall thrust of the Budget was on promoting growth.

RS Sharma, chairman, ONGC, said: “I feel, overall, the Budget addresses the expectations. The focus has been more on the stability and the futuristic growth, especially for the oil and gas upstream sector."

According to S Gopalakrishnan, chief executive, Infosys, “The abolishing of fringe benefit tax (FBT) will be beneficial to the IT industry. Removing excise duty on packet software, the streamlining, and the refund of service tax on overseas services is something the IT industry will benefit from."

Rahul Bajaj, chairman, Bajaj Auto, said: “I am happy on behalf of the whole industry that FBT has been abolished, but I am a little bit unhappy about MAT (minimum alternate tax)."

Pranav Ansal, vice-chairman and managing director, Ansal API, said: “The hike in infrastructure spending will be a huge boost for the real estate industry as the two are directly related for the most part."

According to Chanda Kochar, chief executive, ICICI Bank, "The growth target of nine percent set by the Budget is clearly a positive signal, especially given the backdrop of weak macroeconomic conditions globally."

Gul Kripalani, president, Indian Merchants Chamber (IMC), feels, "Though the fiscal deficit has been estimated to rise further to 6.8 per cent, IMC doesn't consider it alarming, because fiscal deficit in the US is 12 per cent and in the UK it is 15 per cent."

Maninder Singh Grewal, managing director, Religare Technova, was of the opinion that the budget is a stable one. However, it has done little to spur internal IT spend on processes and applications - something that could have optimised the availability of good validated manpower now underutilised because of the global meltdown. 

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Fiscal expansion to push growth: FM
Bhagyashree Pande
Tribune News Service

New Delhi, July 6
While announcing the Budget today, Finance Minister Pranab Mukherjee said: “I am sensitive to the great challenge of rising expectations of a young India. There are new and powerful reasons for us to create, facilitate and sustain those opportunities. Thus, the challenge lies before the new government to restore the much promised 9 per cent growth.”

Laying a roadmap for this growth, the government plans to spend on various schemes and programmes. Budget 2009-10 will increase total expenditure by 36 per cent (over 2008-09) to Rs 10,20,838 crore.

“I do believe that this fiscal expansion will go a long way in reversing the impact of economic slowdown and accelerate our growth revival in medium term,” Mukherjee said.

The government has also kept a window open for increasing more spending as part of counter cyclical measure to minimise the impact of global recession. With this in mind, the government has taken a decision to enhance spending by various departments by increasing the gross budgetary support (GBS) by Rs 40,000 crore over Interim Budget 2009-10. Though there are arguments against the government spending more on its own departments especially when it has specifically targeted allocations for its own flagship programmes.

But the Budget states that bulk of the enhanced GBS is directed towards public investment in infrastructure with special emphasis on rural infrastructure, raising growth potential and leading to income generation.

The fiscal deficit target under fiscal responsibility budgetary management has been relaxed for the state governments from 3.5% to 4% of their gross state domestic product (GSDP). This will enable the state governments to raise additional open market loans of about Rs 21,000 crore in the current year.

However, income of the government continues to be a concern and is expected to continue slipping. The projected tax receipts are budgeted at Rs 6,41,079 crore in 2009-10, compared to Rs.6,87,715 crore that the government had targeted in 2008-09

Thus the fiscal deficit expected to be at 6.8% of gross domestic product, as compared to 2.5% in 2008-09 . This level of deficit is a matter of concern, admitted the FM adding that the government will address fiscal consolidation at the earliest.

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Govt expects to garner  Rs 35,000 cr from 3G
Girja Shankar Kaura
Tribune News Service

New Delhi, July 6
The government expects to garner as much as Rs 35,000 crore from the auction of third generation (3G) spectrum, Finance Minister Pranab Mukherjee said here today while presenting the Budget.

The figure announced by the Finance Minister is much higher than that was announced by him while presenting the Interim Budget in February last. He had then said the government would be able to raise just about Rs 20,000 crore.

"The Budget estimates for 2009-10 include a sum of Rs 20,000 crore as the expected revenue from auction of 3G spectrum," Mukherjee had noted.

However, after recent meetings between the IT Ministry and the Finance Ministry, the government seems to revise its target.

Although it was expected that the government might announce the reserve minimum price for the 3G spectrum space in the Budget, that has not happened. Instead, the figure given out at Rs 35,000 crore does actually points out that the reserve price has been pegged at somewhere around Rs 4,040 crore.

However, the same would not be announced following the clearance from the cabinet and after consultations with the eGOM on the issue.

Incidentally, the estimated figure, included in the receipts from the “other communications services” category in the Budget is also higher than what Communications and IT Minister A Raja had laid out last month.

He had said the government could raise Rs 25,000 crore from auction, down from the previous fiscal estimate of Rs 30,000 crore.

The auction process has been delayed several times since January last when it was first scheduled to happen mainly due to differences prevailing between the ministries involved in it over the pricing of the spectrum.

Besides, the high reserve price kept by the government also kept some of the major and foreign players away from the pre-auction meeting forcing the auction to be put off.

The 3G auction would enable telecom operators to offer high-end services like high-speed Internet and video downloads on mobile phones.

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IT industry welcomes extension of tax holiday
Tribune News Service

New Delhi, July 6
The abolishing of Fringe Benefit Tax (FBT) would benefit the IT sector the most.

It had been a long-pending demand of the IT sector for the abolishing of the FBT and the same had also been sought in the proposals put forward by it to the Finance Minister in the pre-Budget presentation.

The sector, which contributes nearly 6 per cent to the national GDP and employs 2.2 million people directly and eight million indirectly, also had expectations for the abolishing of the minimum alternate tax (MAT), but that has not happened.

The Finance Minister has in fact increased the MAT to 15 per cent.

Overall the IT industry feels that the Budget has been good for it. It feels that certain facets of it were encouraging for the sector.

However, it said it was looking for support from the government in the ICT industry. It had recommended a 100-per cent depreciation on financing of IT equipments, which has not been included.

The sector also welcomed the extension of tax holiday on export profits to 2010-11 from this fiscal. In his Budget speech, the Finance Minister had proposed to extend the sunset clauses for tax holidays by one more year to 2010-11 to tide over the slowdown in exports.

Though the 10-year tax holiday expired by the end of fiscal 2008-09, previous Finance Minister P Chidambaram extended the benefit to this fiscal in his Budget proposals for fiscal 2008-09.

According to National Association of Software and Services Companies (Nasscom), the industry's lobby, the Budget had recognised the contribution of the IT-BPO (information technology and business process outsourcing) industry to the country's economic progress and had provided measures to boost it.

“The Finance Minister's decision to extend fiscal benefits available to the industry for one year will help the industry mitigate the impact of the current economic environment and help India retain its competitiveness," Nasscom president Som Mittal said.

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No funds for R&D in pharma sector
Tribune News Service

Hyderabad, July 6
The pharma industry has reacted with cautious optimism to the Budget, saying there were no big and bold moves for the sector though some of the announcements were interesting.

Pharma major Dr Reddy’s Laboratories (DRL) regretted that no grants were announced for research and development nor was there any move to encourage innovation in the pharma industry.

“Under the prevailing conditions, the Budget meets expectations. However, it has not been a bold Budget as expected by many. So, no cheer for the markets,” managing director and chief operating officer of DRL Satish Reddy said.

He said incentives to boost research would have created numerous spin-off benefits to help create the much-needed base for pharma innovation in the country.

Reddy, however, welcomed the announcement on increased government spending on healthcare, which was bound to make an impact in more ways than one.

The reduction in custom duty on life saving drugs and devices was also welcome move as it would improve affordability, he said.

Retention of excise duty at 4 per cent for some of the sectors and abolishing of Fringe Benefit Tax was a good news for corporate India, he said. Increased allocation under National Rural Health Mission was also important for continuity.

Extension for scope of provisions relating to weighted deduction of 150 per cent on expenditure incurred on in-house R&D to all manufacturing businesses (except for a small negative list) was also positive move, Reddy said.

Apollo hails reduction of duty on cancer drugs

Chennai: Lauding budget proposals, Dr Prathap C Reddy, chairman of Apollo Group of Hospitals, today welcomed the reduction of customs duty on cancer and cardiac drugs.

He said the Finance Minister had made an extensive exercise towards inclusive growth and given an outlay for the largest Budget since Independence and this would certainly lift India out of recession and stimulate growth and domestic demand.

However, he stressed the need for encouraging private healthcare and said: “I believe in the big potential in encouraging private healthcare to build the much-needed one hundred thousand hospital beds for the next 10 years.”

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Farmers give thumbs up to Budget
Ruchika M Khanna
Tribune News Service

Chandigarh, July 6
The pro-poor and pro-rural Budget has got a thumbs- up from farm economists, farmer leaders and agriculturists in the region. Hailing the Budget for its approach towards the ‘aam aadmi’, especially those in rural areas, they have welcomed the steps initiated to rev up the farm sector.

The Budget proposes direct transfer of fertiliser subsidy to farmers, talks on interest subvention for short-term crop loans, besides setting up a task force for looking into the non-institutional crop loans. Sceptics claim that increased outlay in rural schemes like National Rural Employment Guarantee Scheme (NREGA), National Rural Health Mission and Rashtriya Krishi Vikas Yojana is more to do with the government patting is back, especially as these schemes helped them storm back to power. But the success of these schemes cannot be denied.

Farm economist RS Ghumman said increased spending on rural infrastructure would go a long way in the growth of the rural economy. “Direct transfer of fertiliser subsidy to farmers will help them in mitigating their losses. But the small and marginal farmers will not get as much benefit from this as those farmers with large land holdings as the direct subsidy distribution will be acreage based,” he said.

President of Bhartiya Kisan Union Balbir Singh Rajewal and leading farm economist SS Johl, too, hailed the decision of giving direct fertiliser subsidy to farmers.

They said earlier it was the fertiliser manufacturer who was being subsidised, rather than the farmer. They, however, rued that no fund allocation had been made for research and development in agriculture that was the need of the hour.

“Increased credit flow in agriculture will definitely help in maintaining the growth target of 4 per cent. Even the additional interest subvention of one per cent for short-term crop loans to those farmers who repay their loans on schedule will bring in better credit culture in agriculture sector.

The task force on dealing with non institutional loans, too, should be beneficial, especially in Punjab and Haryana, where the maximum loans are taken from non institutional sector,” said Johl.

Iswar Dayal, a farmer in village Sambli in Karnal district, too, lauded the pro farmer approach in the Budget.

He said focus on additional spending in rural infrastructure “will stop migration of villagers to cities, besides paving way for economic and social development.”  

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Sensex tanks 869 points
Tribune News Service & PTI

Mumbai, July 6
The Sensex fell 869 points as investors disappointed with the Budget fled the markets. The benchmark index, which opened in the green ahead of the Budget, fell to a low of 13,959.44 before closing at 14,043.40. In the broader markets, the Nifty fell 258.55 points to close at 4,135.70.

Of the Sensex stocks, 28 stocks ended lower with Reliance Infra losing 12.5 per cent to close at Rs 1,131. ICICI Bank, JP Associates, Tata Steel and HDFC fell more than 9 per cent each. Reliance Industries fell 6.53 per cent despite gas sales being given tax concessions in the Budget.

Today's biggest losers were banking sector stocks which fell the most. The Bankex was down 8.17 per cent to close at 7,768.63. ICICI Bank fell the most losing 10 per cent while HDFC Bank closed 5.88 per cent lower. The BSE realty index closed 7.3 per cent lower while the capital goods index lost 7 per cent.

This is the biggest fall after October 24, 2008, when the Sensex had lost 1,070.63 points after the RBI's monetary policy review. The Budget lacked any major economic reforms, including initiatives to increase foreign direct investment in insurance and decontrolling fuel prices. The fiscal deficit target also rose sharply to 6.8 per cent for 2009-10.

Breaching the 15,000 psychological mark, the market later spiralled downwards as Mukherjee began presenting the Budget proposals in Parliament.

According to an analysis of Sensex movement on the Budget days in the past 10 years, today's drop of over 869 points in the benchmark index is the biggest fall.

“The stock markets have voted on the tax Budget presented today. However, I believe that this fall could be attributed partially to the markets having run up on the back of disproportionate expectations,” KPMG India CEO Russell Parera said.

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