India Inc on Friday acclaimed the Union Budget for 2010-11 as a reform-oriented exercise aiming for fiscal consolidation and a stable macro economic environment that would chart the growth path.
Confederation of Indian Industry (CII) President Venu Srinivasan welcomed the measures proposed in direct and indirect taxes, accelerated disinvestment of PSUs, more transparent subsidy regime for fertilizers and financial sector consolidation. He also welcomed the simplification of income tax returns and the automation of central excise and service tax.
Describing the budget as superb, Mr. Srinivasan said that the initiative to target an explicit reduction in the government's debt-GDP ratio could provide confidence to investors and that the attempt to reduce fiscal deficit indicates reduction in government borrowing and has, hence, brought relief to the debt market.
The CII President expects the interest rate to remain stable even as it would help recovery in private sector borrowing. The calibrated unwinding of the stimulus package was also a welcome feature.
Mr. Srinivasan also welcomed the reduction in corporate surcharge and the increase in deduction against R&D and added that change in income tax slab would provide greater disposable income in the hands of the consumers.
Federation of Indian Chambers of Commerce and Industry (FICCI) President Harsh Pati Singhania said that the Finance Minister had done a good and balancing act in seeking to bring the fiscal deficit down. He, however, expressed surprise by the increase in MAT.
FICCI Vice-President and President-elect Rajan Mittal too spoke out against the increase in MAT but was happy that the budget had shown the way for implementation of GST.
Associated Chambers of Commerce and Industry of India (Assocham) President Swati Piramal regarded the budget as pragmatic, positive, growth and development-oriented aiming as it does for inclusive growth.
Ms. Piramal said that the Finance Minister had paid adequate attention for development of social sector and the rural sector and to boost consumption and giving fillip to renewable energy, infrastructure, research and development.
PHD Chamber President Ashok Kajaria said that the budget was positive in its approach and reflected the government's commitment to fulfilling the aspirations of the aam aadmi through its social programmes even while striving to revive the growth of the economy.
ICCI Secretary General R. P. Swami said that the budget was finely tuned and forward looking providing a stable tax and policy framework for the economy.
Mixed reaction from real estate sector
Ramnath Subbu writes from Mumbai:
The real estate sector has had a mixed reaction to the Union budget and while there is a general consensus that being a growth-oriented budget, there are attendant benefits for the sector, they feel some issues could have been addressed.
The positive revision in personal income-tax rates will put more money in the pockets of the middle-class, thereby increasing the buying power and sentiments of home buyers.
Coupled with the extension of the one per cent interest subvention for affordable housing, this clearly is a sign that the residential sector will continue to thrive.
“We would have been even more grateful for the re-introduction of the Sec. 80IB (10) tax benefit scheme, first implemented in 2001, which is definitely a boost for developers of affordable housing. Nevertheless, the fact that existing incentives continue to be in place is positive,'' said Anuj Puri, Chairman and Country head of property consultancy, Jones Lang LaSalle Meghraj. He felt that it was a positive, growth-oriented budget and growth in the economy always equalled growth for the real estate sector. “Because of the overall economic growth implied in their enablement by this budget, we have no overt complaints on behalf of real estate.''
Kumar Gera, Chairman, Confederation of Real Estate Developers' Associations of India (CREDAI), and Chairman, Gera Developments, said for the real estate sector, the budget was “a kind of status quo. There is a good side and bad side. The good is that ongoing projects that suffered due to meltdown and liquidity crunch have a one year extension. The government has continued with interest subvention for loans up to Rs.10 lakh and that is good for the marginal buyer. The thrust on infrastructure too will have a direct bearing on a lot of areas including real estate.''
Ravi Puravankara, Chairman, Puravankara Group, said the reduction in the income-tax rate up to Rs.8 lakh was positive. “A saving of up to Rs.50,000 to a person having salary up to Rs.8 lakh is a great saving and will increase the purchasing power. The extension of time to complete the Sec. 80IB projects from four years to five years is also a good move in the light of the delay caused due to the recession. With substantial focus on rural economy, Tier- II and Tier- III cities will have better growth and will throw up greater opportunities.''
However, Mr. Gera said there was a worry about the indication that the sale of apartments would be considered as a service. “The method of computing will be a huge problem. One cannot pay service tax on the value of land, labour, service and material and this could give rise to litigation and how will the stamp duty be paid.''
In the present recessionary trends, extension of the interest subvention scheme for home loans by one more year is a welcoming step by Finance Minister and this will be a booster to affordable housing. Home buyers will get one per cent interest subsidy for bank housing loans up to Rs.12 lakh provided the cost of house does not exceed Rs.20 lakh, according to Shriram Properties Managing Director M. Murali. Mr. Puri however, felt that the increase in allocation for slum redevelopment to Rs.1,270 crore will ensure that key areas in city centres will begin to yield quality real estate supply