February 29, 2008. Time: 9:43 am. It was a time which witnessed one of the most rushed-up declines of the BSE Sensex in recent times – of 476 points in a matter of just over an hour. And guess what caused this? It was the FM P. Chidambaram’s populist Budget 2008 speech, which gave investors and corporate honchos very little to cheer about. While he spelt out the ‘Mother’ of all loan waivers, reduction in personal tax structure (thus increasing the purchasing power capacity of the middle-class), a 2% reduction in Cenvat and some other gentle changes to other segments, the mood in the Indian corporate arena remained dismal.
Surely, it became clear that while it was a ‘cautiously optimistic’ approach on behalf of the Centre, what lacked was the punch in the attitude to encourage domestic manufacturing prowess. What India Inc. feels is clear – the stage was held for announcing nothing more than just a plan to defend the economy from global headwinds, so that protective growth could continue and votes be cast in the ruling party’s favour. Corporate taxes were not tinkered with and therefore the feeling across the boardrooms is that an easy opportunity to encourage double-digit growth for India Inc. was lost, not to mention the increase in tax on short-term capital gains, which would also prove disadvantageous for companies. Harsh Pati Singhania, (MD, JK Paper Ltd. & Sr. VP, FICCI) justifies, “The government could have taken this opportunity to reduce corporate tax rate to encourage investments. Increase in short term capital gain tax will also have a negative effect. A change in excise duty for cement was also essential for infrastructure development, which will now be surely hampered.”
Then there were various sectors (like IT) which were left literally untouched, most importantly when they clamoured for a reduction in excise duties and peak import duty on raw materials (which currently hovers around the 7.5% mark). Says Ram Kumar, Executive Director, Gemini Communications, “There is little to cheer about for the IT industry in this Budget.
There is no worthwhile mention of schemes to encourage the IT hardware industry. The FM has left the software sector to handle its challenges themselves.” The air of discontentment was even prevalent in the auto industry, primarily amongst the mid-sized and luxury car-makers as Wilfried Aulbers, MD, DaimlerChrysler India, complainingly says, “We are not happy as there is a continued discrimination against big cars. This is illogical.”
But wait! There are also leaders who belong to the other school of thought and fully support the Budget. And while many complain that the Budget was a mere eye-wash, others still stand testimony to the fact that the FM tried what he could, but under pressure of course! And though many complain about the low-key boardroom atmosphere across the country, many still vote for the FM. Many like S. Mahalingam, CFO & Executive Director, Tata Consultancy Services who pronounces that, “The Budget has highlighted the big opportunity for IT in the domestic market with the decision to allocate additional funds towards the state wide area networks, common service centers, data centers as well as smart cards for benefits management like PDS scheme at the state level. Also, initiatives like the central plan monitoring system for outlays and outcome measurement for the Planning Commission are moves towards progression.”
Even Vinnie Mehta, Executive Director, MAIT declares, “We welcome the government’s decision to maintain the current levels of Customs duty and a 2% reduction in the mean CENVAT rate on all IT products to 14%, while the excise duty on computers continues to be 12%.” And Vijay Kumar, CFO, Sify Technologies puts his opinion forward as, “This the right time to stimulate the economy further to continue our growth path, and that’s exactly what the Finance Minister has attempted. The measures are meant to stimulate the manufacturing sector and are all welcome steps.” Sunil Duggal, CEO, Dabur India conveys his satisfaction as, “The FM’s decision to reduce Cenvat rate to 14% is in line with the growth roadmap, and will go a long way in achieving the FM’s goal of taking the manufacturing sector growth rate to double digits. The government’s decision to reduce sales tax to 2% is also a positive step forward, and will help bring down costs. There will be overall cost efficiencies and savings.”
Surely, there have been reviews and cross-reviews about how the budget had little for the corporate honchos. And in all that was discussed, one issue and two words sprang up almost every single time – manufacturing and consumer goods! You might wonder why this is the case. Well, with manufacturing sector and the consumer goods category suffering the most in the bygone months (and quarters), one thing stands out clear – manufacturing needed a fillip and consumer goods needed a saviour to arrest the decline in sales.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Surely, it became clear that while it was a ‘cautiously optimistic’ approach on behalf of the Centre, what lacked was the punch in the attitude to encourage domestic manufacturing prowess. What India Inc. feels is clear – the stage was held for announcing nothing more than just a plan to defend the economy from global headwinds, so that protective growth could continue and votes be cast in the ruling party’s favour. Corporate taxes were not tinkered with and therefore the feeling across the boardrooms is that an easy opportunity to encourage double-digit growth for India Inc. was lost, not to mention the increase in tax on short-term capital gains, which would also prove disadvantageous for companies. Harsh Pati Singhania, (MD, JK Paper Ltd. & Sr. VP, FICCI) justifies, “The government could have taken this opportunity to reduce corporate tax rate to encourage investments. Increase in short term capital gain tax will also have a negative effect. A change in excise duty for cement was also essential for infrastructure development, which will now be surely hampered.”
Then there were various sectors (like IT) which were left literally untouched, most importantly when they clamoured for a reduction in excise duties and peak import duty on raw materials (which currently hovers around the 7.5% mark). Says Ram Kumar, Executive Director, Gemini Communications, “There is little to cheer about for the IT industry in this Budget.
There is no worthwhile mention of schemes to encourage the IT hardware industry. The FM has left the software sector to handle its challenges themselves.” The air of discontentment was even prevalent in the auto industry, primarily amongst the mid-sized and luxury car-makers as Wilfried Aulbers, MD, DaimlerChrysler India, complainingly says, “We are not happy as there is a continued discrimination against big cars. This is illogical.”
But wait! There are also leaders who belong to the other school of thought and fully support the Budget. And while many complain that the Budget was a mere eye-wash, others still stand testimony to the fact that the FM tried what he could, but under pressure of course! And though many complain about the low-key boardroom atmosphere across the country, many still vote for the FM. Many like S. Mahalingam, CFO & Executive Director, Tata Consultancy Services who pronounces that, “The Budget has highlighted the big opportunity for IT in the domestic market with the decision to allocate additional funds towards the state wide area networks, common service centers, data centers as well as smart cards for benefits management like PDS scheme at the state level. Also, initiatives like the central plan monitoring system for outlays and outcome measurement for the Planning Commission are moves towards progression.”
Even Vinnie Mehta, Executive Director, MAIT declares, “We welcome the government’s decision to maintain the current levels of Customs duty and a 2% reduction in the mean CENVAT rate on all IT products to 14%, while the excise duty on computers continues to be 12%.” And Vijay Kumar, CFO, Sify Technologies puts his opinion forward as, “This the right time to stimulate the economy further to continue our growth path, and that’s exactly what the Finance Minister has attempted. The measures are meant to stimulate the manufacturing sector and are all welcome steps.” Sunil Duggal, CEO, Dabur India conveys his satisfaction as, “The FM’s decision to reduce Cenvat rate to 14% is in line with the growth roadmap, and will go a long way in achieving the FM’s goal of taking the manufacturing sector growth rate to double digits. The government’s decision to reduce sales tax to 2% is also a positive step forward, and will help bring down costs. There will be overall cost efficiencies and savings.”
Surely, there have been reviews and cross-reviews about how the budget had little for the corporate honchos. And in all that was discussed, one issue and two words sprang up almost every single time – manufacturing and consumer goods! You might wonder why this is the case. Well, with manufacturing sector and the consumer goods category suffering the most in the bygone months (and quarters), one thing stands out clear – manufacturing needed a fillip and consumer goods needed a saviour to arrest the decline in sales.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
IIPM Ranked No. 1 B-School In Global Exposre - Zee...
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
IIPM, GURGAON
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