BUDGET EXPECTATIONS :
Dileep Athavale | TNN
Pune: Industry leaders and analysts have termed the forthcoming Union budget as an opportunity to create a stable policy base on which to build the long term progress of Indian manufacturing. The country has weathered the economic slowdown much better than many others and every effort should be made to align India’s manufacturing strength with the global recovery, they told TOI.
Neelesh C Shrikhande, associate director with business consultants Pricewaterhouse Coopers, said: “India’s manufacturing sector, led by automotive, cement and consumer durables, has been successfully fuelling India’s GDP for the past six to nine months. Most of these segments have a direct impact on the population at large given their ability to ‘cut’ through household budgets and maintain better price points with consumers, thanks to the fiscal incentives. The finance minister, therefore, will have to be wary of rolling back these incentives in the forthcoming Budget.”
Shirkhande said Budget 2010 will have to strongly lay down concrete deadlines for timely roll-out of the national manufacturing policy and goods and services tax (GST), which are expected to address various strategic initiatives. “In all, there should be a fine balance between a worsening fiscal and monetary position and the ‘price sensitive’ growth momentum of the manufacturing sector.”
Ajay Patil, director of finance at hydraulics and automobile engineering company Eaton India, said: “Budget 2010 proposals have to be dealt in a manner to sustain what appears to be a promising economic recovery, control spiralling inflation, especially food prices and fiscal deficit. The continuation of economic stimulus package and its duration is another keenly watched decision, especially for critical sectors like automotive and engineering goods. Industry is expecting a definitive position on GST implementation, considering the scale and complexity of dismantling the present indirect tax regime.”
As there is little scope to alter the duty structure, players are of the opinion that some fundamentals can be set right to simplify things for the industry. Tushar Mehendale, managing director of material handling systems manufacturer ElectroMech, said a clear-cut roadmap for goods and services tax implementation must be drawn up. “Along with the implementation of GST, all local levies like octroi and entry tax should be abolished. Also important would be doing away with the different anachronistic forms such as the ‘C’ form, as this inhibits inter-state trade to a large extent and creates a lot of hassles in basic documentation.”
Mehendale added that the government should treat equipment supply to all infrastructure-related projects (roads, dams, power plants) as deemed export by default. This will reduce the cost of equipment substantially and the construction companies will be incentivised to opt for better machinery that offer higher productivity and in turn lead to dramatic shrinkage of project execution time.
Naushad Forbes, director, Forbes Marshall, took a more philosophical view, saying, “I’m hoping that this year’s budget will be a first class nonbudget.” Forbes said economic liberalisation has taken away most of the suspense the budgets always carried. “Budgets have largely gone from being statements of who gets what crumbs and who gets soaked, to general statements on the direction of the economy. As such, they have become more like a state of the economic union address than an accounting exercise.”
“The country’s manufacturing sector is now strong enough to sustain global competition and, in fact, it is doing so quite effectively,” Forbes said.“India has weathered the recession far better that most other countries and things can only get better. Stimulus packages can only provide a shortterm relief and will not provide for sustained growth. I don’t expect the budget will provide anything in that area.”
Interview - Chemical World