Mixed reaction from state industry (The Times of India, Lucknow, 01 March, 2007)
Team TOI

‘A pragmatic budget, given the political and other compulsions.’ ‘Budget made with an eye on the elections due in the politically pivotal state of UP,’ ‘showered largess on the rural sectors.’ ‘Chidambaram has stepped up spending on irrigation, fertilisers subsidies, seed development, rural road and farm credit and offered duty cuts on a host of goods, including edible oils to combat inflation. These were some of the common statements coming from the top corporate heads and business big wigs in the state.

“There’s nothing in the budget to encourage industry; any benefits will be only indirect,” said Irshad Mirza, president, Associated Chamber of Commerce and Industry, UP. “A lacklustre budget---the message is clear---concerns of the industry sector have been ignored. More could have been done for the sugar, leather and other industries. For the textile industry, the budget has been generally positive. TUF on textiles, reduction in custom duties, will help the textile industry. Something on similar lines should have been done for leather industry which has posted 13 per cent growth. Simplification in tax policy is needed,” he said.

“Fringe benefit tax and tax on banking cash transactions should have been removed. No benefit has been given in corporate tax and in personal taxation, increasing exemption limit from Rs 10,000 is too meagre. The budget will not be able to contain inflation,” said SB Agarwal, secretary general, Associated Chamber of Commerce and Industry, UP.

PHD Chamber of Commerce and Industry (PHDCCI) UP chapter is however of the opinion that the budget is balanced, which will be able to contain inflation. Increase in exemption remit in service tax from Rs 4 lakh to Rs 8 lakh will benefit the small service providers. Though the budget does not come out with clear policy initiatives to support growth target of 10 per cent and faster growth. “Decrease in excise and customs will benefit the common man,” said Sanjay Bhatia, president, PHDCCI.

Initiatives to better manage non-plan expenditure was lacking, he said. Moderate reforms had been taken to contain inflation, service tax in addition to VAT on work contracts should have been avoided.

Sushanto Roy, head, Sahara Infrastructure and Housing said that in this year’s budget introduction of reverse mortgage by the National Housing Bank, especially for senior citizens was a welcome move. Bringing rentals on commercial property under the ambit of service tax was bound to slow down the market of lease rentals of malls & business complexes, he said. He also aired other concerns like non extension of cut off dates of approval for benefits of Section 80 IB (10), completion of a project within four years from end of the financial year in which it was approved by the local authority with no consideration to the size of the project etc. They still remained intact.