SupportBiz captures industry reactions from across India.
Dinesh Agarwal, Founder & CEO of IndiaMART says GST is good news for MSMEs: While the FM called for speedy reforms today, the Budget did not indicate much in that direction. The key highlight, however, was ‘GST’ which is now expected to be operational by August 2012. We hope that this timeline is met as it would certainly help address the multiple taxation issue faced by the MSMEs currently. We had also expected some effective mentions to simplify taxation and also consolidate multiple departments to allow better compliance by MSMEs. This still remains to be looked at by the government. Another positive for MSMEs in this budget was allocation of Rs 5,000 cr to SIDBI for venture fund which would enhance equity availability to MSMEs. Exemption of capital gains tax from sale of property when proceeds are used for investment in SME would also help augment funds for SMEs to a certain extent.
According to Sunil Munjal, Chairman of Hero MotoCorp and chairman of the CII Eco Policy Council (speaking on behalf of the CII Eco Policy Council) the Budget has good measures but that it is a missed opportunity: From the recommendation that CII had made, the finance minister has actually picked a lot of it, and I have to say, on the FRBM, capping subsidies etc, a whole host of thing. Nonetheless, the question still remains as to how he plans to cap subsidies at 2% of GDP. I think more could have been done and if more was to be done, this was the year to do it. Hence, I would like to say that we probably missed an opportunity.
Partha Iyengar, vice president, Regional Research Director, Gartner India calls this a fairly political Budget: The budget overall is a fairly ‘political budget’, with very little in the way of bold (or even timid) reforms to drive economic growth. Given the current economic climate it seems to be focused on not upsetting anyone (read political ‘allies’) too much, by not trying to please anyone too much. The only slight silver lining is the verbal emphasis and some increase in outlays to the infrastructure sector, but, given the massive requirements here, even this is likely to be seen as too little too late. From an IT sector perspective, there is nothing specific that is either a strong negative or positive. Some of the key areas of concern for the industry, like skills development have not received any major focus.
Akshay Mehrotra, chief marketing officer, PolicyBazaar, calls it a quite budget: This year’s budget has been a quite a non- event and not aimed at boosting fiscal consolidation, food security or DTC. It will be difficult for finance minister to keep the fiscal deficit at 5.1%. The highest saving possible will get around Rs22000 more in your hands but this will be nulled out with the increase in service tax and inflation.”
Lalit Kumar Jain, the national president of the Confederation of Real Estate Developers’ Association of India (CREDAI) calls it a sheer missed opportunity: We as the umbrella body of real estate in the country feel disappointed by the unyielding measures taken by Mr. Finance Minister in the Union Budget of 2012-13. Coming as a disappointment to us, the policy measures as rolled out in the Union Budget has failed to highlight the role of the housing sector in the economy while also failing to acknowledge the significance of employment generation by the sector and the need of housing in the country.
"The Union Budget is clearly an opportunity missed by the government in achieving the dual purpose of providing shelter to weaker sections while boosting the GDP of the country. The proposal of bringing in an umbrella tax structure to the cement industry will increase the cost of housing in India and will negate the development process of the sector. Also providing ECB to affordable housing is a minor respite to the sector but its significance in the longer run will be absolutely meaningless. With the proposed policy measures there is an inherent risk of liquidity drying up in the Indian Real Estate sector wherein the exemption of capital gains tax to invest in Small and Medium Enterprises may result in cash out from real estate. From the Union Budget, we definitely expected huge impetus to affordable housing sector which would have worked as an incremental boost to economy. Another disappointing fact to arise from the Finance Minister’s speech has been the interest subsidy on home loans which is definitely not enough for sustenance and will undeniably not help the Economically Weaker Sections or the Lower Income Group segment.
“We definitely expected some boost to affordable housing segment in ways of special schemes and proposals wherein an interest subvention of five to seven percent for the LIG and EWS housing and promotion of rental housing through tax exemption would have helped in sustaining the growth process of the real estate sector. As nothing came up, in a nutshell we can only comment that the policy recommendations in the Union Budget have been unsatisfactory to say the least and will not help the housing sector of the country as desired.
Kumar Bharat, director , BCC Infrastructure believes Pranab Mukherjee's Budget is a welcome Budget for the real estate industry: The budget does lay an emphasis on growth in infrastructure sector with the help of Public-Private-Partnership (PPP) which is the need of the hour. It has been our long standing demand to lay emphasis on the housing sector as there is an acute shortage in housing vis-à-vis population growth specially in affordable housing segment. Decisions like allowing External Commercial Borrowings (ECB) for such low cost projects, setting up of Credit Guarantee Trust Fund to ease the institutional credit for housing loans and increase in limits of interest subvention of 1% on housing loan and of indirect finances under priority sector will give further boost to the sector and ensure a smoother flow of funds in the sector.
T Chitty Babu, chairman & CEO, Akshaya said it could have been better: “Announcements made in Budget 20102 – 13 especially the increase in service tax and excise duty rate is bound to increase the input costs thereby leading to increase in the cost of buying real estate. This does not forebode well for the industry. Allowing ECB for affordable housing is a welcome move. The Government could have certainly increased the exemption limit on interest paid for housing loans .The government has also been silent on pushing reforms and introduce policies to increase housing stock . Overall the reaction is mixed
Bhim Yadav, chief executive officer, Falcon Realty Services said allowing ECB is a good step: We welcome the Finance Minister’s decision to allow External Commercial Borrowings (ECB) for low cost affordable housing projects as this will give a much needed boost to the affordable housing segment. This will further help in bridging the demand supply gap in the affordable housing segment. Also setting up of the Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans is an excellent impetus which will have a great impact on the prospective customers going for affordable homes.