H. M. Nerurkar, the Managing Director of Tata Steel, has lauded the Union Finance Minister for presenting a budget which has surprises mostly on the positive side. He rated the budget as a good budget which lays out the targets and road map of the Government to maintain growth momentum while ensuring greater fiscal prudence in the near-term. The budget has remained focussed on ‘simplification' of procedures. He said that the budget was largely neutral for the steel industry and Tata Steel but it does contain other growth measures which might have an indirect effect on steel demand.
Lower fiscal deficit was perhaps the most important aspect of the budget, Mr. Nerurkar felt. Mr. Mukherjee has succeeded in his attempts to keep the deficit within acceptable limit while maintaining growth focus. He has provided visibility of the fiscal deficit targets for the next three years, which gives one the confidence that fiscal prudence will continue to get his attention.
He has also undertaken an ambitious target for disinvestment. “This will require him to maintain the ‘business confidence' at a high level, something that I believe he would be able to do without difficulty,” the Tata Steel MD said.
Mr. Nerurkar, however, said that he would have liked to see some announcement on measures to control food prices. He also felt that the hike in excise duty on petro-products might have an inflationary impact. Similarly, roll back of excise duty relief will partly negate the impetus given to infrastructure and construction sectors due to rise in the cost of cement, steel and power.
On the corporate front, reduction in company surcharge and greater deductions for in-house R&D activities are welcome although they will be partially diluted by an increase in MAT for companies on a growth path. An extension of interest subvention on pre-shipment export credit will be beneficial for the economy. The reduction in personal income tax levels is significant and across the board. This will serve to sustain demand levels by boosting disposable incomes of the domestic consumer.
The clean energy cess on domestic and imported coal will also have an impact on the user industries. I was also expecting the Government to encourage capital spending in large projects by extending investment linked incentives to more sectors like steel.