Budget 2017: How experts from various sectors reacted to Jaitley's vision

On an overall basis, India Inc hailed Wednesday's Budget as growth oriented and said that the proposals will make the economy more competitive and transparent. Finance Minister Arun Jaitley presented his fourth Union and Rail Budget which named the key areas of policy focus as farming, social reforms, infrastructure and recapitalising India's banking system. In his opening remarks, Jaitley pledged to "spend prudently and wisely for the people, especially for the poor and downtrodden."

Describing the Budget proposals to clean up political funding by massively reducing the cash donations at Rs 2,000 from Rs 20,000 and abolition of the FIPB as "big signals" of a change in the Government mindset, Mahindra Group Chairman Anand Mahindra said these steps illustrate a determination to shed legacy and step firmly into the future. "These steps are big signals about the Government mindset. They show its determination to shed the skin of legacy and step firmly into the future," Mahindra said.

Gopichand Hinduja of the Hinduja Group, said "The Budget is aimed at making the economy more competitive and transparent with its emphases on higher investment in physical and social infrastructure as well as in digital connectivity. This will lead to more job creation and income to households as well as increase in productive capacity and consumption." He said these steps can take the economy to an 8-10% growth trajectory, even though note ban and the head winds of protectionism in the developed world will be a challenge.

Adi Godrej of Godrej Group described the Budget as "an appropriate, growth-oriented one as there is a tremendous emphasis on rural and agricultural growth with several initiatives announced. He hailed the proposal to introduce a legislation on contract farming, it will add tremendously to agricultural productivity. 

Here is what experts from different industries had to say on the Budget: 

Banking sector:

Bandhan Bank MD Chandra Sekhar Ghosh said that the banking sector would get a fillip after doubling of Mudra loan, treatment of affordable housing as infrastructure and capex outlay increase by 25%. "The Rs 10,000 crore recapitalisation is not enough for the PSU banks with the level of bad loan situation," he said.

ICICI Bank MD and CEO Chanda Kochhar said that it was a comprehensive budget for the economy with a huge amount of multiplier effect, which will positively impact the whole lending push towards housing. "This budget has achieved an excellent balance between the much required focus on investments and structural reforms required for ease of doing business and simplifications. In line with the fiscal prudence, the budget was not carried away towards high market borrowings. Capital gains have been shifted from three to two years, which means that the people will buy and sell homes at more frequent levels," she said while talking from markets point of view. Kochhar said that in terms of balancing, there has been lot simplification in ease of doing business and tax reforms, which will benefit the economy needs. Talking on tax exemption, she said that that it is a good step, which may not substantially impact the profit of the banks, but is directionally a good step.

Dena Bank's Ashwani Kumar welcomed the Rs 10,000 crore capital infusion along with explicit commitment to do more as a "morale booster" for the sector, saying banks are in "dire" need of capital for credit growth and compliance with the Basel-III framework. "There are many positives for banks like the balance between need to spend and maintain fiscal discipline," Axis Bank's Shikha Sharma said. She also said infra investments in the absence of private sector investments with a focus on the rural pockets is also a positive, along with the stress on housing and simplification of taxes. The increase in allowable provision for NPAs from 7.5 to 8.5%, which will reduce the tax liability for the banks, was also welcomed by the sector.

Textile sector:

The Cotton Textiles Export Promotion Council (TEXPROCIL) welcomed the Budget and appealed the government to restore some of the incentives relating to interest subvention for merchant exporters and cotton yarn and MEIS benefit for cotton yarns. The job creating package for textile sector found a worthy mention in the latest Economic Survey 2016-17. However, the made-ups sector which is included in the package still awaits the rates on ROSL scheme (Refund of State Levies), TEXPROCIL Chairman Ujwal Lahoti said. He said he hoped the rates will be announced soon so that the sector could take advantage of this path breaking scheme. Lahoti welcomed the 5% reduction in corporate income tax for medium and small enterprises with Rs 50 crore turnover. This will benefit a large number of MSMEs in the textile sector also. He appreciated that the Government will continue to take measures to boost growth as well as employment generation. He however stated that export sector, which was languishing on account of low overseas demand and rising protectionism, had not found a mention in the budget. He appealed to the Government to restore some of the incentives relating to interest subvention for merchant exporters and cotton yarn and MEIS benefit for cotton yarns.

M B Raghunath, President (Sales & Marketing) of Mafatlal Industries welcomed the budget and stated that the garment sector will have a boost on long term basis due to 35% increase in government expenditures in rural infrastructure development; rural investment and rural economic improvement will boost demand for textiles and garments. SSI & Medium Scale textiles and garment manufacturing companies will be benefiting from this.

Tourism sector:

SOTC Travel Managing Director Vishal Suri said five special tourism zones to be set up in partnership with the states along with the launch of the second worldwide Incredible India campaign will help improve inbound tourism. Suri further said the ban on cash transaction over Rs 3 lakh is a welcome move and will provide a level playing field.

Thomas Cook (India) COO Mahesh Iyer opined that this Budget has very little to offer to the tourism industry, but with plans to launch Incredible India 2.0, there is something to look forward to. "India has a vast railway network and the Railway Budget acknowledges the strength of this. One of the biggest announcements is the withdrawal of service charge on rail tickets (which) will lead to more bookings and will enable the consolidation of a digital economy," he said.

Cox and Kings Director Peter Kerkar said infrastructure, being very crucial for the tourism sector, was the most important themes in Union Budget 2017. "Road and rail infrastructure are crucial in terms of boosting tourism as these are widely used mode of transport in India....stepping up the allocation for national highways, announcement to launch dedicated trains for pilgrimage and service charge withdrawal on booking of rail tickets are welcoming moves," he added.

Power: 

Former Coal India chairman and BCCI member P S Bhattacharya was apprehensive about mounting stress on the banking sector owing to the power sector which did not witness revival despite 'UDAY' scheme and the Budget did not address the same. "There is affordable housing policy but now power will not stay affordable. Plant power load factor in the industry had dropped to 60% from 79%. The price will not be affordable," Bhattacharya said.

Real Estate sector: 

L&T's R Shankar Raman said the Budget endorses the criticality of resource allocation to infra sector for achieving sustained economic and inclusive growth. Abolition of FIPB, retaining the tax structure for capital gains and flexible mind set towards recapitalisation of banks hold hope for flow of funding for the priority programmes. But he emphasised the economy needs to address the requirements for competitive manufacturing and employment generation.

Hiranandani Group's Niranjan Hiranandani welcomed the sops for affordable housing sector, saying, "The Government has provided infrastructure status to the affordable housing finally. We have been demanding this for the past 25 years. The move will help investments in form of long-term funding to the sector." "I personally believe that Government should declare all such housing units, whether in metros or in any other part of the country with 60 sq metre as carpet area across the country," he said.

Automobile sector: 

Renault India's Sumit Sawhney said budget will revive infra and rural economy. "Control over fiscal and revenue deficits are encouraging and the focus on rural development, thrust on infrastructure and poverty alleviation while keeping fiscal prudence is in the right direction. With the agenda of transform, energise and clean India, the Budget paves the way to create sustainable growth and generate employment. The overarching focus has been on reviving the market sentiment and reviving economic growth in a non-inflationary manner, while attempting incremental fiscal consolidation," Sawhney said.

Guillaume Sicard of Nissan India said the Budget is a positive approach towards growth with focus on rural sector, higher spends on infra and improving road construction for better last mile connectivity across the country

Speaking on the startup industry, Sunil Kant Munjal, Chairman, Hero Corporate Services said that the startup industry in India has great potential. "The startup sector has been given the required incentives to expand growth. This will be very beneficial for the country in the long run," Munjal told ANI.

Pharma Sector:

Budget proposals receive mixed reaction from pharma sector. The pharma sector representatives said the Union Budget has failed to specifically address imminent challenges directly affecting the key industry, but hailed certain proposals of Finance Minister Arun Jaitley. The life sciences sector had great expectations from the Budget not only from a fiscal incentive perspective but also from a regulatory angle. Expectations were based on the Government's vision of making India one of the top three pharmaceutical markets by 2020, according to experts.

Glenn Saldanha, Chairman and Managing Director, Glenmark Pharmaceuticals said, overall, the Union Budget is a step in the right direction. Lowering tax on MSMEs is a welcome step that would provide a much-needed fillip by creation of jobs and putting more money in their pockets in all sectors, including pharmaceuticals. The Government has shown its clear intent towards fast-tracking inflow of FDI, and the scrapping of FIPB is a notable step that would go a long way in supporting the objective of ease of doing business, Saldanha said.
Additionally, the government's impetus to reduce the borrowing cost and increase access to credit will surely help businesses to grow, he said. "We see the biggest-ever allocation to the infra sector which would benefit all sectors, including the fast- growing pharmaceuticals. The Finance Minister reiterates his commitment to keep current account deficit and fiscal deficit under control," Saldanha said.

(With agency inputs)