The Union Budget 2014-15 was announced amid high expectations. The Hon’ble Finance Minister presented a balanced budget giving due cognizance to the issues currently being faced by India’s economy. Getting back to the pre crisis growth level is of paramount importance given the need to generate jobs and assure inclusive growth. The emphasis given to sectors like manufacturing, infrastructure, tourism, textiles and housing, which have the potential to create both skilled and unskilled job opportunities is indeed applaudable.
Besides, the fiscal deficit to GDP target for the current financial year has been kept unchanged at 4.1%, which is the same as indicated in the interim budget announced earlier this year. The government has given a clear signal that it will attempt moving towards a more efficient expenditure management system and a rationalised tax framework. The resolve to get back on the path of fiscal consolidation seems strong. Nonetheless, we will have to wait and watch the implementation strategy of the government.
In addition, government’s resolution towards inflation management is noticeable. The announcements of setting up a Price Stabilization Fund and working with states in re-orienting APMC Act will help tackle elevated food prices. Further, measures to enhance agriculture productivity will enable inflation management on a sustainable basis in the long run.
Given this backdrop, FICCI conducted a quick survey amongst its members to gauge the sentiment post budget. The survey results are based on responses from about 60 CEOs, who are members of FICCI’s National Executive Committee.
FICCI CEO’s Poll Results
Does the Union Budget FY15 meet expectations that it will drive growth and push reforms?
- A majority 85% of respondents said the recently announced Union Budget FY15 stands up to their expectations.
- They felt that the budget for this fiscal year is pro growth and going ahead the government is expected to push reforms.
- CEOs belonging to sectors like real estate and building, infrastructure, IT and ITeS, renewable energy and power were particularly optimistic about the near term prospects.
Would you consider reviewing your investment plans post Budget?
- About half of the CEOs who took part in the survey indicated that they propose to increase their investments in near future.
- In fact this is a significant improvement over the sentiment noted in the recently released FICCI’s Business Confidence Survey. About 37% of the respondents in FICCI’s Business Confidence Survey had cited higher investments in near term.
- The buoyancy with regard to investment prospects seems to be recuperating, after being on a downtrend in the past few quarters.
Key takeaways from the Union Budget 2014-15
- Pro Growth. Focus on employment generation and entreprenuership development is encouraging.
- The promise of no retrospective application of tax provisions which creates fresh liability and permitting advance ruling for Indian assesses are very positive.
- Announcement to revise definition of MSMEs being looked forward to.
- Lowering of the threshold limit of investment allowance.
- Emphasis on infrastructure and housing.
- Benefits to the Power sector.
- Resolve to address coal and iron ore issues.
- Support for skill development.
- Promoting use of Information and Communication Technology.
- No concrete announcement on Goods and Services Tax (GST).
- Proposed changes in computation of Dividend Distribution Tax (DDT).
- Capital gains on Mutual Fund.
- Disallowing CSR as a business deduction.
- Service tax exemptions and negative list pruned.
- Minimum Alternate Tax issue remains. An amendment had been proposed in section 115JC of the Act.
- The issue of land is outside the ambit of the Budget, but needs to be addressed on a priority basis.
