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'This is an excellent Budget'

Business Standard Bureaux and Team NetScribes

Following are the reactions of some industry stalwarts on the Union Budget that was presented in the Parliamnet on Wednesday.

P S Subramanyam, Chairman, Unit Trust of India

'This is an excellent Budget by any stretch of imagination'

I expect the Sensex to go up 250 points if not more by the end of the day and India to enter into a long bull trend. Several steps in the Budget will help the growth of the capital markets and if the mood was low before the Budget, the FM has changed it.

Indian companies with global ambitions will also get the right boost. Now they have greater freedom to invest in foreign companies and that is good news especially for our IT sector. I see the signs of a prolonged bull phase erupting.

There is also courage in the Budget. The privatisation moves, labour reforms, reduction in the PF rates and other measures is a sign that the FM enjoys tremendous support from his team and is prepared to do what is needed to make India grow. This is a very happy sign to foreign investors, let alone the raising of the FII cap to 49 per cent.

I was watching US President George Bush today morning delivering a growth speech to his country. I think the FM has done the same. This is an excellent Budget by any stretch of imagination.

Rating: 11/10

NetScribes

R Ramaraj, CEO, Satyam Infoway

'Overall, my gut reaction is that it is a good budget'

Overall, my gut reaction is that it is a good budget. Specifically, there are two to three areas which have been positive.

For instance, the announcements on corporate taxation, utilisation of ADR proceeds and the ability to acquire companies abroad are good announcements. Though I don't have the exact details on the fungibility issue, it too is a step in the right direction. What I expect is that this will add to the ability to raise foreign capital.

However, let me reiterate that overall, the budget sounds good."

Rating: 8/10

NetScribes

K R Bharat, Managing Director, Credit Suisse First Boston

'This is an outstanding budget in terms of second-generation reform'

This is an outstanding budget in terms of second-generation reforms, which is exactly what the FIIs had been looking forward to.

The interest rate regime has been eased. From the Indian capital markets point of view, just about everything that the markets had asked for has come - the increase of the FII investment limit to 49 per cent, the lowering of dividend tax from 20 per cent to 10 per cent, the two-way fungibility for ADRs and GDRs and the processes towards complete capital convertibility.

Rating: 9/10

NetScribes

Janaki Ballabh, Chairman, State Bank Of India

'The biggest achievement of this Budget is the credibility it lends to India'

The biggest achievement of this Budget is the credibility it lends to India. The FM has managed to keep his promise on the fiscal deficit target and this makes the world look at this fiscal 4.7 per cent of GDP target as a real number.

Major concerns on the labour, privatisation and infrastructure fronts have also been addressed and thrust has been given to all areas. This makes the Budget a very complete exercise too.

There is also talk and action in the right direction with respect to greater autonomy to banks. The abolition of the Banking Services Recruitment Board will give more powers to banks and allow them to recruit faster and not compulsorily go through the laborious 12-month process, although one did expect some autonomy on the compensation front too.

All in all, this has been a very satisfying Budget. Definitely between 8 and 9 out of 10.

Rating: 8.5/10

BS

R V Shahi, CMD, BSES

''The new target of 4.7 per cent of the GDP is remarkable'

The achievement of the fiscal deficit target of 5.1 per cent of gross domestic product (GDP) is remarkable for the year 2000-2001.

Even more remarkable is the new target of 4.7 per cent of the GDP for 2001-2002. The removal of surcharge on the corporate tax is a good step. Although there is a surcharge of two per cent on account of the Gujarat earthquake, it will still lead to net gains.

The rationalisation of customs and excise duties will also help the industry. The other good thing is the divestment target of Rs 120 billion set for 2001-2002.

Another measure that will help corporates is the lowering of dividend tax to 10 per cent. This will result in considerable savings.

The Budget speech also clearly spelt out that Rs 15 billion will be granted to state governments which reform their electricity boards. However, the disappointing factor is that a clear policy has not been spelt out on mega power projects.

Rating: 8/10

BS

Deepak S Parekh, Chairman, HDFC

'Banks and financial institutions will follow up with a cut in the lending rate'

The cut in small savings and administered rates by 150 basis point will require banks to pare the interest rates on deposits by 100 to 150 basis points. Later on, the banks and financial institutions will follow up with a cut in the lending rate (prime lending rate) by 50 basis points.

The lowering of the bar to Rs 2500 for deducting tax at source on interest income earned from deposits is a good move aimed at preventing splitting of deposits and also spreading the tax net wide.

Doing away with the Banking Service Recruitment Boards (BSRBs) altogether will see fresh blood coming into the banking system and is a good move for the state-owned banks. Raising the limit for income tax exemption for housing loans from Rs 100,000 to Rs 150,000 per annum was expected and will give a fillip to investments in the housing sector.

Rating : 8/10

BS

Sudhir Goel, Vice president-projects, Amsoft Information Services

'This is not a very encouraging Budget'

There should have been greater emphasis on building infrastructure by way of broadband, OFC and wireless modes.

The government should put forward a detailed programme for the IT and telecom sector, which is India's fastest growing sector and a major source of revenue. The government should have an IT Budget for itself to adopt IT based procedures to speed up procedural delays and clearances and reduce their own non-plan expenditures.

BS

Sharyu Daftary, President, Indian Merchant's Chamber

'It will revive the economy'

The traditional economy sector, especially textiles, automobiles and ancillary industries will be back on the rails. The finance minister has paid adequate emphasis on the development of the infrastructure sector - roads and power. Several concessions were given for the housing sector too, she said.

The Union government's initiative to make divestment in 27 public sector units is a welcome step. This will speed up the economic reforms, she added.

Labour policy reforms will help in generating more jobs. The amendments in exit and contract labour policy will help the growth of the industrial sector. The finance minister has increased the compensation package from 15 days to 45 days for the workers. This move takes care of the workers' interest.

Adequate protection has been provided to the domestic industry and agriculture to protect them from the onslaught of World Trade Organisation (WTO) agreement, which comes into force from April 1, 2001.

Import duty has been increased on several agricultural and industrial products, which will protect the domestic market.

BS

Ashwini Kakkar, MD & CEO, Thomas Cook

'FM has completely ignored the tourism industry'

The finance minister has completely ignored the tourism industry, which some time ago was about $8.3 trillion worth.

He also ignored the employment potential and has done this for the third time in a row. Hong Kong, for example, was in big trouble due to the Asian crisis. But this year the country has boomed back with 14.5 million tourists, which brought $8 billion into their economy.

Tourism is a great opportunity to bring foreign direct investment into the country. But it has been completely ignored and I think this is shameful.

BS

D R Pendse, Economist, Centre for Economic Policy Advice

'It is risky to make a total assessment on the basis of the speech'

Only the best portion of the budget is presented in the finance minister's speech. The adverse things come to notice only from the budget documents.

The finance minister spoke about the expenditure controls but no proper plan has been mentioned. He said that three per cent of the government's staff will retire and only one per cent will be recruited. But that has been the case every year.

The Rs 120 billion divestment target is too little and I doubt if that will also materialise. If Rs 50 billion of it is to be spent on infrastructure, then that is wrong. The divestment proceeds must go towards retiring public debt. If you are going to spend that, then the fiscal deficit will remain the same.

BS

John Band, CEO - ASK-Raymond James

'Better than expected'

This is the best Budget speech Yashwant Sinha could have made under the circumstances. The general budgetary stance has been quite sensible.

A lot of small but necessary measures such as the increase in investment limit of foreign institutional investors in domestic companies to 49 per cent and two-way fungibility of American depositary receipts (ADRs) and global depository receipts (GDRs) has been taken.

Liberalisation of the debt market is also a step in the right direction.

Also Sinha's aggressive stand on privatisation is welcome. You could detect the beginnings of an exit policy in his speech since he has raised the limits of the size of state-run undertakings, wherein automatic lay-off can be considered, from an enterprise with 100 employees to that of 1000 employees.

Insurance to employees against the consequences of liberalisation has also been factored in. These two are early signs of a decent exit policy, which has been a weakness in the past.

Statements regarding his announcements with regard to the power sector have been low key. However if he carries through the reforms that he is suggesting, the sector could have exciting times going forward. Overall the budget has been much better than expected budget.

BS

M S Sidhu, Managind Director, Apara Design Automation Pvt Ltd

'This is a very good Budget'

It should lead to further growth in the IT and telecom sectors. The revised and lesser complex duty structure is a welcome move and it will lead to increased spending for infrastructure.

The reduction in direct taxes except the two per cent surcharge for Gujarat is also a step in the right direction.

BS

R K Pitambar, Director, M&M

'It is very good'

It is very good from the perspective of the commercial vehicle segment, which suffered last year because of various reasons. However, the excise duty cut on passenger cars and utility vehicles did not happen.

BS

Girish Rangan, Executive Director and CEO, BPL Mobile

'Software sops to benefit telecom sector'

The various sops and support to the software sector will definitely act as a positive for the telecom sector since software is an integral engine of growth for telecom. The five-year tax holiday and 30 per cent exemption for telecommunication service providers setting up operations before 31 March 2003 would prove positive for the telecom industry and does well for the investing community to witness the government's commitment to support the telecom sector.

Also, the 2-way fungibility that has been introduced between ADR's and local equity will encourage FDI, especially in investment heavy sectors like telecom. One area that continues to be an area of concern is the burgeoning government expenditure. The will to really cut down this expenditure was not very much evident.

Rating : 7/10

Netscape

Kumar Mangalam Birla, Chairman, Aditya Birla Group

'Budget has been a very positive one'

This year's Union Budget has been a very positive one with some very significant steps taken. The finance minister is intent on doing a lot to spur investment in infrastructure, which is a very welcome move.

Measures are also being taken for development of national highways, which was long pending. The minister also talked about speeding up the process of privatisation, which is a very essential step in today's context.

The move to continue with banking sector reforms is also critical. The finance minister has talked about deepening the debt market and setting up more debt recovery tribunals.

The move to allow Indian corporates to convert domestic shares into ADRs/GDRs is also a very significant initiative.

The decision to remove the 10 per cent tax surcharge on corporates and individuals is very welcome as it will encourage savings and hence investments. The lowering of dividend tax to 10 per cent from 22 per cent imposed last year will also go down well with the corporate sector.

He has also announced several significant initiatives for the IT sector as well.

Rating: 9/10

BS

Samir Arora, CIO, Alliance Capital Mutual Fund

'It was way better than our expectations

We were not expecting much from the budget. The budget clearly indicated the policy intent of the government.

Cut in dividend tax and increase in FII limit is a demonstration of the fact that the government has now understood the game and is willing to plod along.

Reduction in the size of the government and declaration statement of progress of the previous budget and so on are first time measures.

Reduction in interest rates and corporate tax rates is obviously good for the stock market. Also, the absence of any clear losers (except for ITC) and the biggest negative - tax on software companies- not happening, stock market has no reason to complain.

Rating : 8.5/10

BS

Ishaat Hussain, Finance Director, Tata Sons

'Budget has both vision and strategy'

What I'd be really looking at is the deployment of the budget. If deployed properly, then only the industry will benefit.

I feel the lowering of interest rats are significant but again, the inflation standing at 8 1/2 per cent is certainly a cause for concern. We are in a Catch 22 situation, as unless two important factors - the rate of inflation and the fiscal deficit -- are decreased, the lowering of interest rates will not mean much.

For the corporates, there is a lot in this budget. It is a good move that they have reduced the dividend tax to 10 per cent, though this tax rate is not really justified.

Another good move by the finance minister is the removal of corporate surcharge. The 2 per cent surcharge has been avoidable due to the Gujarat earthquake, but I am sure none of the corporates would mind it as it is going for a good cause.

The announcement of one excise duty has been a boon to us, which otherwise amounts to tedious work and all sorts of litigation problems. Since customs duty has been decreased, sectors like tea will be benefited.

Rating: 8/10

BS

Peter Mukherjea, CEO, Star

'This budget should have a very positive impact on the economy as a whole'

This is a very positive budget for the Indian industry, much better than last year. The finance minister has taken several steps this year, which will be beneficial.

For instance, the minister has reintroduced the concession of a five-year tax holiday and 30 per cent deduction for units, which commence their operations on and before March 31, 2003.

Since the concessions are made available for Internet service providers (ISPs) and broadband networks, I feel this has given an upside to new media. I am happy with the announcements made for winners of game shows. A reduction in corporate tax surcharge and lastly the reduction in tax on winning from game shows from the earlier 44 per cent to 30 per cent will now give the winners a 14 per cent benefit.

As for taxation of foreign television channels, I would comment on it only when there is clarity on the issue. The budget is also terrific for students in terms of future education with the financing through loans available upto Rs 750,000.

Rating : 9/10

BS

S P Hinduja, Chairman, Hinduja Group and President, IndusInd International Federation

'FM has been innovative across the board'

The Finance Minister Yashwant Sinha has belied skeptics and produced a bold and imaginative budget, which should arrest the present slowdown in the economy and bring it back on a growth path.

Notably, his proposals for reduction in direct taxes and custom duties, simplifying excise duty structure, support to the IT sector, extending tax holidays to the infrastructure and telecom sectors, increased spending on highway development, are among some of his noteworthy proposals.

His proposals on labour reforms, though welcome, should have gone a little further.

Reduction in interest rates will help boost economic activity.

Foreign and overseas Indian investors are encouraged by the budget proposals.

We would have liked to have seen some measures on electoral reforms in order to discourage the parallel economy and bring about major transparency.

Rating: 9/10

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