Search the Internet          Tips  Sites: Finance, Investment

WB gives Sinha the thumbs up

Union Finance Minister Yashwant Sinha's Budget has evoked quite an overwhelming response from industrialists and chambers of commerce in West Bengal. Barring a few discordant voices, the majority have showered praises on Sinha hailing his Budget as being reforms friendly.

Reforms in labour, agriculture and infrastructure sectors with special attention to the tea industry appears to have earned the FM unending accolades. C K Dhanuka, chairman of Indian Tea Manufacturers Association, described the Budget as investment friendly 'both from the point of view of investment in India and investment by Indians.'

He told rediff.com, "This is the best Budget Sinha has presented so far. The welcome feature is his courage to bring about reforms in the labour sector, which will lead to substantial employment generation. Besides, he has also performed remarkably well in containing the fiscal deficit to 5.1 percent last year. Going by his current success, I am optimistic that he would easily be able to achieve the fiscal deficit of 4 per cent as promised in the current Budget. It is bound to give fillip to the capital market while the corporate world too would gain."

Dhanuka also complimented the FM for his decision to increase customs duty on imports of tea from existing 35 percent. He, however, regretted that the surcharge of Rs 2 per kg was not reduced as the tea industry had recommended.

R S Jhawar, president of Indian Tea Association, felt that the FM should have increased the customs duty on tea a bit more, ''perhaps close to the maximum permissible limit allowed by the WTO -- 150 percent.''

"In our recommendation, we had requested the FM to hike the customs duty on the imports of tea to at least 100 percent. But that didn't happen. Having said that, I am pleased that the FM has actually given thought to our other grievances on the hike in central government's development allowances to the tea industry from current 20 percent to 40 percent. This increase in development allowance is encouraging. This would now mean that the only 60 percent of our profitable income would fall under the purview of tax," Jhawar remarked.

A visibly thrilled Dhanuka said that increase in development assistance would help the tea industry go for more plantations. Like Jhawar, he too felt that the hike in custom duty would boost the domestic market, 'which wasn't the case in last year's Budget.'

"Fifty percent imports used to be from SAARC countries, which will change now," he remarked.

Another industrialist B M Khaitan felt that the FM's initiatives on labour reforms notwithstanding, the proposed amendments would need Congress' support to get passed in Parliament. He said that Sinha's proposed reforms sector would yield desirable success unless a political will was exhibited. He rubbished talks that labour reforms endangered workers' interests.

S K Birla of the Birla Group told rediff.com that the Budget was aptly indicative of the fact that the second generation reforms were on track.

He added, " I don't think that any one can delay reforms any longer. The way he (Sinha) presented the Budget, it didn't look like it would have any adverse impact on the economy. The equity market is already up, a sign that it would only get better. Dividend tax is down, surcharge has been reduced and he has introduced the debt market, which has been debated for so long. All that he has on direct tax is a hit of Rs 55 billion, which he wants to make up by tax bouyancy."

Nazeeb Arif, the secretary general of Indian Chambers of Commerce and Industry, said that the FM had made a beginning in right direction even though the dividend tax was not abolished completely. According to him, the disposal of surcharge has come as a pleasant shock for the industry considering fresh imposition of the two percent additional Gujarat surcharge.

"After a long time we have a Budget, which has announced a lot of reforms in agriculture, infrastructure and labour," Arif added.

Arif, however, denied that the present Budget was presented in keeping with the assembly elections in five states in May this year. He argued that if that was the FM's intentions, he would have refrained from resorting to some very harsh decisions while dealing with issues related to labour and infrastructure.

Former ICC president K K Bangur, on the other hand, said that the customs duty increase on cement from 25 percent to 35 percent would not make a substantial difference.

"Cement is a very freight-sensitive item and none of us have really envisaged a lot of cement coming into the country. But, in the general analysis, it's a positive Budget, which is growth oriented. And for the first time the government is trying to address very contentious issues like labour with utmost sincerity and I think the repeal of the Sick Industries Companies Act is a good step that will help the financial sector to felicitate speedy restructuring of sick industries where a lot of money is blocked."

Bangur described the fresh imposition of tax on tobacco products as encouraging since 'these (tobacco products) are vices and needn't be encouraged at all.'

No one from the tobacco industry has made any statements so far. Repeated attempts to seek comments from ITC failed.

ALSO READ:
The Budget 2001-2002 Special
Money

Tell us what you think of this report