Union Budget - Press Release
The Madras Chamber of Commerce & Industry (MCCI) feels that the Budget presented by the Finance Minister, P Chidambaram, is in general, a positive budget. The fact that there are no populist measures and no new subsidies is to be appreciated. The intention to contain fiscal deficit and the projections, if achieved, is appreciable. The commendable discipline in expenditure control during last year to keep the deficit at 5.1% is a good sign.
Some of the welcome proposals are the substantial additional allocation for JNNURM with a focus on urban transport. This and the increased allocation for Skill Development initiatives and HRD in general will pave the way for long term sustainable growth.
The Investment allowance of 15% on investments of Rs.100 crores in plant and machinery is a positive incentive. We are happy that there are no major increases in customs, excise or service tax rates.
Also on the renewable energy side, we welcome the reintroduction of generation based incentive for wind energy as well as the low cost debt refund available to IREDA from the National Clean Energy Fund. This is a step in the right direction to implement the intention of the Clean Energy Fund.
Additional allocation of Rs.5000 crores to NABARD for agricultural products storage should help the farmers and reduce post -harvest losses.
The abatement of customs duty on semi conductor fabs could increase investment in this high technology.
On the flip side, one of our disappointments is that there is no major thrust for exports. Given the current account deficit, export incentives could have boosted exports and would have significantly contributed to reduction of Current Account deficit. The fact that increasing exports was not even mentioned while talking of the Current Account deficit was particularly noteworthy.
The absence of a roadmap to reducing the revenue deficit is also a matter of concern
There are no substantial measures for boosting the manufacturing sector. Though the proposed investment allowance and efforts towards Skill development would help to an extent, this may not be adequate to strengthen our trailing manufacturing sector. The Chamber was looking for more strong measures to propel a manufacturing recovery.
While some lip service was paid to improving the ease of doing business in India, much remains to be seen how much of this will happen in reality.
There has also been not enough focus on the coal, power and infrastructure sector.
The effective increase in customs duty and CVD for coal by merging the classification of steam and bituminous coal would effectively increase the cost of generation of power. However, the simplification of the classification is welcome.
All in all, the FM has taken a cautious stand in presenting the budget. At the end of the day, our achieving the potential growth of 8% or more depends on proper implementation of proposals and ensuring good governance.
28th February 2013
28th February 2013