India Inc reacts to Budget 2018

Here are the initial reactions of corporate India:-

“The Union Budget 2018-19 has done a commendable job in holistically addressing the various priorities of the Indian economy. It has addressed social sector priorities and charted out a clear plan to boost infrastructure, while maintaining fiscal discipline.

The wide ranging measures announced for various segments of the rural economy will boost income levels and create gainful & sustainable employment. This in turn will help to increase consumption levels in the economy.

The far reaching National Health Protection Scheme, which will be the largest of its kind in the world, along with measures taken to enhance education, skilling and research & development are indeed welcome steps.

The Government has also maintained its focus on creating infrastructure with an aim to catapult India onto a higher and sustainable growth path. The allocations for roads and railways are at all-time highs, which will have a positive impact on related sectors as well.

All these measures have been undertaken with an eye on continued fiscal prudence.  Expenditure has been divided between budgetary and non-budgetary sources. The adoption of a maximum level for public debt to GDP will instil even more confidence in the fiscal framework.

Overall, the budget has laid out a vision for higher economic growth along with social empowerment through a holistic approach to various sections of the economy.” Chanda Kochhar, managing director and CEO, ICICI Bank

“It is encouraging to see that the initiatives announced in the Union Budget 2018 acknowledge the current needs for the development of infrastructure, agriculture, finance, health, education and social protection. However we see little action in addressing the fundamental immediate need of the economy to attain energy security and reduce the burden of crude oil import at a time when oil prices are rising.

With India’s huge import bill, there is a need for the Government to take the reforms and reliefs route to spur domestic oil production and give a big boost to the country’s energy security objectives. Contrary to the burden of import, domestic production will add substantial revenues to the Government’s exchequer – at the same time create jobs and help the economy at large. The best way is to create an eco-system to encourage domestic production and cut down dependence on imports with a sustained, targeted approach.

Reducing the Cess rate from 20% to 8% in line with industry recommendations, creating a level playing field for domestic production vis-à-vis imported crude, and addressing other issues of fair pricing of domestic produce and additional royalty burden will spur confidence and help both investment inflow and the nation’s energy independence. We look forward to having these issues addressed in the near future and working closely with the Government to reduce dependence on crude oil imports. This will be important to balance the fiscal and trade accounts and will be a step towards fulfilling Prime Minister Narendra Modi's vision of reducing dependency on imports by 10% by 2022,” say Sudhir Mathur, CEO, Vedanta Cairn Oil & Gas.

“We welcome the government’s thrust on encouraging R&D pursuits in areas of artificial intelligence, machine learning, robotics and edge analytics. This move will further leapfrog the innovations in this space that is significantly driven by Indian companies and will place the country at the centre of global digital transformation focus,” says Keshab Panda, chief executive officer & managing director, L&T Technology Services.

“The pain of re-introduction of LTCG at 10% could have been softened a bit if simultaneously, STT had been eliminated,” says Naresh Makhijiani, partner & head-tax, financial services, KPMG in India.

“The Finance Minister has rolled out an excellent budget with a thrust to core areas such as agriculture, healthcare, education, infrastructure and rural development. The overall focus is to support farmers and rural areas, fine print focuses on boosting growth, jobs and private investment. Overall, this is a positive budget, with continued focus on fiscal prudence, boosting the manufacturing sector, augmenting MSMEs, improving healthcare and skill development. Impetus to GIFT City IFSC, gold exchanges, disinvestment, ETFs for debt financing and measures to reviving corporate bond markets augurs well for the capital markets,” says Ashishkumar Chauhan, managing director and chief executive officer, Bombay Stock Exchange.

“The budget is bold and path-breaking and will make the country participate and enrich the upsurge in the growth of the global economy. The focus on development of agriculture, healthcare, education, employment generation and infrastructure with an innovative approach should comfortable place the economy in the growth trajectory of 8-10% per annum and double its GDP by 2025,” says Ashok Hinduja, chairman of Hinduja Group of Companies.

“The announcement of considering a mandate to large corporate entities for accessing bond markets to meet about one-fourth of their financing reflects the government’s impetus on reviving the bond market on the exchange platform. Another announcement of increasing focus on agricultural derivatives will strengthen our financial infrastructure and connect India to Bharat. We welcome such progressie reforms to strengthen the exchange market ecosystem,” says Sanjit Prasad, managing director and chief executive officer, Indian Commodity Exchange.

“Hearing about blockchain and cryptocurrency on Budget day is a clear indication of how important and widespread this technological innovation has become in India. Blockchain and Cryptocurrency Committee of India welcomes the statement and reaffirms our unstinting assistance to the government and all regulators in helping evolve a robust ecosystem for cryptocurrencies,” says Ajeet Khurana, head, Blockchain and Crytpocurrency Committee of India.

“The government’s move to impose long-term capital gains tax (LTCG) of 10% on over Rs 1 lakh gains made from capital market investments and the decision to retain the securities transaction tax (STT) will dampen the investor sentiments. While the tax will adversely affect serious investors who are funding the India growth story, it won’t have any impact on short-term traders. Instead of introducing LTCG in its current form, the government could have done better by changing the tenure of this tax or given the corresponding benefit by re-introducing 88E to take the deduction of STT,” says K Suresh, national president, Association of National Exchange Members of India.