Agriculture, infrastructure and education are the positives from Budget: M&M
01 March 2006In exclusive arrangement with CNBC
Anand Mahindra, VC and MD, M&M, says that agriculture, infrastructure and education are the three main positives from the Budget, although he is not happy with the differences in the duty.
Your candid sense of the Budget… were you disappointed by the lack of big reforms?
On the macro sense of the Budget, because I don't think one can hit every high point and please everyone. The three high points I was hoping the Budget would hit and they did were to pour a lot of money into agriculture and in a right way; targeted expenditure on irrigation, rural roads and farm credits.
The second high point was infrastructure and there was great emphasis on it. There is a renewed sense of commitment to building infrastructure, particularly the highways and expressways and the finance corporation.
The third is they haven't forgotten that it is the duty of the government to invest in social equity in terms of education and health. In a large sense I am pleased and in a selfish sense, in terms of our own automotive industry. Obviously a small section, which makes small cars, have a lot to cheer about. I am very happy because that will build India into a small car hub. But I think the misguided perception was that it is only in small cars where India can be a world-beater; and we at M&M don't believe that it's the only area of expertise and global competence for the country.
Were you disappointed that there were no excise duty benefits for the UV space and does it make pricing a bit more difficult and give you less elbowroom?
The small cars, what we call the two-box car which has gotten the benefit and in a sense our vehicles were not in competition with that segment. The people who want to buy larger cars are not going to switch back to smaller cars because of this price difference.
My disappointment therefore comes from not a perception that our revenues are going to be hit or volumes are going to be hit, but just a perception that I think that if the government was going to try and play industry policy makers and try and become strategic or in other words, target investment in certain areas then I believe that is a misguided notion and it should have had a flat rate of duty reduction for all cars and let industry and its participants show where India has comparative advantage.
Differences in duty is once again the old hand of government creating distortions, playing strategy makers, which I thought it has parted ways from doing.