Budget 2017 is for long-term growth, say CII members

Industry hopes that thrust on rural job creation, agriculture growth may boost consumption

The Gulmohar Hall at the India Habitat Centre in New Delhi’s Lodhi Road was packed with senior corporate executives, industry leaders and media persons since 10:40 am– half an hour before the finance minister started his budget speech. The tensed mood inside the hall was evident from the fact that there were barely any other noise except for Jaitley’s voice that echoed from a number of speakers installed in the area.

Their somber faces, however, lit up briefly as soon as the finance minister made announcements regarding personal tax after over an hour of the speech. A light hum, arising out of smiles, could be traced. While there were more such instances, the general mood remained subdued as the Jaitley failed to come up with any big reforms for the economy or sops for the corporates.

Key takeaways from the Budget remained confined to reduction on tax for the MSME sector, increased allocation to the MGNREGA scheme and thrust provided to increasing agricultural production in the country. While these measures are expected to improve the state of rural economy, rapid policy changes were missing, rue industry veterans.

According to Nausad Forbes, president of Confederation of Indian Industry (CII), the budget has the potential to trigger consumption boom at the “bottom of the pyramid”. Reduction of tax rate by Rs 12,500 for individuals earning Rs 5 lakh or above will be helpful, industry leaders said. But there was more to be done.

"Although it is a positive budget, I think it could have been better. It will help increase discretionary income, however, the quantum is going to be lower than expected. But on the other hand, it is appreciable that even though the finance minister has announced so many increases in public spending he targets to keep the fiscal deficit at 3.2%", said  Sumit Sawhney, chief executive officer and managing director, Renault India.

Measures such as reduction of corporate tax, as Jaitley had promised earlier in 2015, and increasing public expenditure were among the key expectations of the industry. While Jaitley announced that allocation on capital expenditure would be increased by 25 per cent for 2017-18, new initiatives are due to attract more private investment, especially in the form of foreign direct investment, in manufacturing, food processing and building supply chain. According to a top executive of a major fast-moving consumer goods company, the advent of goods and services tax (GST) would help India transform its supply chain and warehousing capacity.

As Jaitley was nearing the end of his hour-and-a-half-long speech, smiles were once again visible on some faces as the FM turned towards the issue of curbing unaccounted flow of money into the political system of the country. It was, however, unclear whether they expressed frustration or genuine happiness.