Mr. Adi Godrej, Chairman, Godrej Group:

Mr. Adi Godrej, Chairman, Godrej Group:

 

 

"I was surprised that the Finance Minister has not made major pronouncements  on disinvestment or reforms.

 

The positives are the stimulus provided by considerable expenditure on urban renewal, the social sector and rural development.  The stimulus provided by removal of the surcharge on personal income tax, which means that tax payers will pay 10% less income tax, will be considerable.

 

Abolition of the fringe benefit tax is a strong positive.  The fact that rate in excise duty … and service tax rates in the stimulus packages are untouched is good.  A major positive is that the GST will be implemented by 01/04/2010.  GST will provide a tremendous fiscal stimulus.  Other things being equal it will add one to two percentage points to the GDP growth rate.

 

I was enthused by the growth target being set at 9%.  I trust the Government will try to achieve that number from the Jan-Mar 2010 quarter onwards.

 

The negatives of the budget were the total lack of attention to the great potential affordable housing could provide in reviving GDP growth.  I thought the 50% increase in the MAT rate was a serious negative."

 

Other points by Mr. Godrej:

 

1. Some of the provisions in terms of fiscal stimuli good – urban renewal, government spending, rural development, social sectors,  all this stimulate development
2. Excise duties and service tax have not been touched is a positive.  Removal of surcharge on personal income tax was highly stimulating.  Everybody will pay 10% less personal tax now.
3. MAT has been increased by 50% ie. Last year from 7.5 to 10 and 10-15% this year is a negative. Companies who have invested in backward areas expecting tax benefit which been neutralized with the increase in MAT, will lose faith in Government pronouncements. MAT increase not good for Corporate India.
4. No incentive for affordable housing is very disappointing.  It would have been a win-win situation for encouraging affordable housing.  It would have been revenue positive and an increase in GDP growth.  This would have increased revenue in the Steel sector, cement sector etc
5. Overall a good budget where consumption and demand will be up but the benefits that accrue on one hand will be neutralized on the other due to MAT increase.
6. Consumption will be up  due to Personal IT surcharge being abolished
7. FBT is a nuisance tax and it is very good that it has been abolished. The Govt. expenditure for collection of these taxes is very high.
8. No major Government pronouncements on economic policy, reforms, disinvestments, what the Government plans in terms of economic policy.  The Economic Survey was excellent but the follow up in the budget is very poor.
9. FMCG demand and sales will be good, but MAT not good for FMCG.
10. A good budget which will boost consumer confidence, increase consumer spending and we can expect a GDP growth of 7-8% this year.
11. Budget was dry and a bit disappointing. Markets were clearly disappointed.  Keeping in mind the markets and  enthusing  investors into  the stock market is very important for the Government at this stage as they need to go in for very

Strong disinvestments.   A strong stock market is a win-win situation for the Government.  It was surprising that they did not pay adequate attention to this and the disinvestment announcement and disinvestment provision to balance fiscal deficit was not made.

 

 

Daniel
Perfect Relations
Chennai
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