Indian industry, from large conglomerates to small industries, is far from impressed with finance minister P Chidambaram's interim budget, which puts off most key decisions as well as the cost of its 'liberalisation' measures to the next government.
Medium, small and micro enterprises (MSMEs, in Indian speak) are even more put off, as they have got no tax relief to help them face rising input costs.
One major grouse is that the government failed to pass key taxation measures like the Goods and Services Tax (GST) and the Direct Taxes Code (DTC), meant to simplify India's complex and variable tax regime.
Chief executives of big companies also said the tax and subsidy reduction targets set by finance minister P Chidambaram looked too ambitious, particularly as he seems unlikely to be around to implement them. Once again he has left the onus on the next government, to be elected around May.
''What is needed now is quick and effective implementation of reforms that are long-pending, among these the GST and DTC. Any action taken to tackle the reforms backlog will boost business sentiment, re-ignite the investment cycle, and propel the economy into a higher growth trajectory,'' Kumar Mangalam Birla, chairman of the Aditya Birla Group, said.
R Shankar Raman, chief financial officer at engineering and construction major Larsen & Toubro, said, ''Achieving the targeted revenue growth in a sluggish economy will be a challenge in 2014-15. Measures to boost the health of the manufacturing sector in general and capital goods in particular would require sustained initiatives over the next several years.''
Govind Shrikhande, managing director of retail firm Shoppers' Stop, said the ''political budget'' aimed to appease the common man, stressed industries and the ruffled economy – and the main beneficiaries are the manufacturing and automobile industries, which have received significant respite in excise duty.
The reduction in excise duty from 12 per cent to 10 per cent on capital and consumer goods will be a great relief to manufacturers and retailers, helping growth of these sectors, he said.
T V Narendran, MD (India and Southeast Asia) at Tata Steel, said relief to the struggling manufacturing sector augurs well for steel makers. But, he said, it needs to be noted the sector's problems are more structural in nature.
''While the finance minister has highlighted the role played by the Cabinet Committee on Investment in clearing stuck projects, there is an urgent need for a comprehensive review of the entire mechanism for clearances (such as environmental and forest clearances) to industrial projects. To revive industrial growth, the government needs to implement a time-bound, simple mechanism that is fair to all stakeholders and encourages economic activity.''
Harsh Goenka, chairman, RPG Enterprises, said, ''The budget seems balanced and practical. There has been minor tinkering with the taxation structure; largely steps in the right direction that need to be supported by larger policy decisions to bolster investment and improve sentiment, both internally and globally.''
Firdose Vandrevala, executive vice-chairman, Essar Steel, said something was better than nothing. ''The proposal to reduce excise duty on automobiles in the current economic environment is a welcome step, though it would have been more meaningful and impactful if the excise duty on steel would have been reduced. This would have had a positive and deeper influence on a wider section of Indian industry,'' he said.
Small industries, including the hospitality industry which is vital for boosting tourism and earning much-needed foreign exchange, are even more disappointed as they seem to have been virtually ignored.
The Canara Plastic Manufacturers' and Traders Association slammed the interim budget or vote-on-account, alleging that it had ignored the demand of micro, small and medium enterprises (MSMEs) for a reduction of excise duties and increasing the excise exemption limit, despite the rising costs of goods and services.
B A Nazeer, president of the association, said ignoring the demand of MSME sector will definitely reverse growth of the sector which is already suffering because of economic slowdown. While welcoming the announcement of excise duty cuts on selective capital goods and automobile sector, Nazeer said the same should have been extended to all products of MSME's, which would given a great fillip to its flagging fortunes.
Chidambaram, presenting the vote of account to parliament, had blamed the opposition for the non-passage of the key GST and DST bills – reform measures that are essential to encourage Indian enterprise as well as attract global investors.
''I leave it to you to answer the question, who blocked the GST when an agreement on the game-changing tax reform was around the corner? We have also got ready a Direct Taxes Code that will serve us for at least the next 20 years. I intend to place it on the website for a public discussion without partisanship or acrimony. I appeal to all political parties to resolve to pass the GST laws and the DTC in 2014-15,'' Chidambaram told the Lok Sabha during his budget speech.