ET BureauLarsen & Toubro chairman AM Naik has lauded the finance minister���s attempt to address issues related to consumption and investment to maintain growth. Mr Naik is, however, disappointed that the Budget has nothing in it to boost the power sector. Also, the proposed increase in MAT will adversely impact software exports and infrastructure projects with long gestations.
The Budget has proposed several measures on the infrastructure front. How do you see this playing out in the long term?
The finance minister has presented a balanced Budget in difficult circumstances. He has addressed issues of both consumption and investment to maintain a stable growth rate. Recognising that infrastructure as the key area of focus, he has committed that infrastructure spend will rise to 9% of GDP by FY14.
The FM has made an effort to address the needs of the infrastructure sector in terms of policy and funding. However, more needs to be done on the tax front such as reintroduction of tax exemptions under Section 10(23G) and removal of the anomaly caused by the cascading effect of dividend distribution tax.
The FM has proposed the abolition of fringe benefit tax (FBT), apart from an increase in MAT. Corporate tax has remained unchanged. How important are each of these developments?
The abolition of FBT is a relief to the corporate sector and will simplify administration. It will also reduce the tax burden. Increase in MAT from 10% to 15% will add to the burden for software and infrastructure companies, which otherwise enjoy tax relief.
Commitment to GST (goods & service tax) roll-out from April 1, 2010 has been maintained. This will streamline the collection process and simplify procedures.
A key concern has been the rising level of fiscal deficit. How much of a challenge is this in the time to come?
The fiscal deficit is a matter of concern, but in the prevailing economic environment, it is an important instrument to drive economic growth as is being implemented across the globe.
The challenge is to ensure that the deficit adds to the capacities of the economy and does not only result in inflation. Care needs to be exercised to avoid non-productive expenditure, which can lead to inflation triggering a tighter monetary policy and consequently curtailed investment.
How far will the Budget go in addressing the global economic slowdown and its effect on India?
The government has increased budgeted expenditure levels by 36%, which will provide a boost to consumption. The FM has also announced measures that will help sustain consumption through a combination of reduced personal tax rates and the maintenance of status quo on other direct and indirect taxes at pre-stimulus levels.
The Budget has proposed several measures on the infrastructure front. How do you see this playing out in the long term?
The finance minister has presented a balanced Budget in difficult circumstances. He has addressed issues of both consumption and investment to maintain a stable growth rate. Recognising that infrastructure as the key area of focus, he has committed that infrastructure spend will rise to 9% of GDP by FY14.
The FM has made an effort to address the needs of the infrastructure sector in terms of policy and funding. However, more needs to be done on the tax front such as reintroduction of tax exemptions under Section 10(23G) and removal of the anomaly caused by the cascading effect of dividend distribution tax.
The FM has proposed the abolition of fringe benefit tax (FBT), apart from an increase in MAT. Corporate tax has remained unchanged. How important are each of these developments?
The abolition of FBT is a relief to the corporate sector and will simplify administration. It will also reduce the tax burden. Increase in MAT from 10% to 15% will add to the burden for software and infrastructure companies, which otherwise enjoy tax relief.
Commitment to GST (goods & service tax) roll-out from April 1, 2010 has been maintained. This will streamline the collection process and simplify procedures.
A key concern has been the rising level of fiscal deficit. How much of a challenge is this in the time to come?
The fiscal deficit is a matter of concern, but in the prevailing economic environment, it is an important instrument to drive economic growth as is being implemented across the globe.
The challenge is to ensure that the deficit adds to the capacities of the economy and does not only result in inflation. Care needs to be exercised to avoid non-productive expenditure, which can lead to inflation triggering a tighter monetary policy and consequently curtailed investment.
How far will the Budget go in addressing the global economic slowdown and its effect on India?
The government has increased budgeted expenditure levels by 36%, which will provide a boost to consumption. The FM has also announced measures that will help sustain consumption through a combination of reduced personal tax rates and the maintenance of status quo on other direct and indirect taxes at pre-stimulus levels.
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