Assocham President Rana Kapoor . 
Special 
Assocham President Rana Kapoor . The Interim Budget 2014-15 presented by Finance minister P Chidambaram on Monday 17 February, 2014 comes with many surprises as the government goes to poll this year.
Industry leaders and experts reacted to the excise duty cut and fiscal deficit estimates among other announcements made by the finance minister. Here is who said what in reaction to the interim budget.
Mr Rana Kapoor, Assocham President
Despite being low on expectations in an election year, Finance Minister P Chidambaram 's Interim Budget has given a pleasant surprise at least partly to the manufacturing sector which has been bleeding. The excise duty cut on automobiles and capital goods will provide a much-needed relief to these sectors.
However, the industry would expect a much larger package from the new government to revive the manufacturing sector when a regular budget is presented sometime in July.
More importantly, the finance minister deserves to be complimented since he is leaving behind the government treasury in sound shape with the result that the overall macro picture of the Indian economy today looks far better than it was about eight months back.
The external sector today is far more stable with exports picking up and the current account deficit capped at $45 billion, a little less than half the worrisome level of $88 billion in 2012/13. The fiscal deficit has also been contained at 4.6 per cent, though it has been achieved by a big cut in the Plan expenditure. But he did not have many choices either.
However, ASSOCHAM feels that there is an urgent need to cap the non-Plan expenditure of the Central government. The non-Plan expenditure of over Rs 12 lakh crore gives an impression of a fat government which needs to reduce its size so that more resources are left for development.
The finance minister also needs a pat for not yielding to pressures of populism, which is generally evident in an election year. However, a ballooning subsidy budget of Rs 2.46 crore remains a big burden on the exchequer and needs to be pruned to a sustainable level by better targeting the subsidies in food, fuel and fertilizer.
Despite being a vote on account, the initiatives on skill development, and the MSME innovation are laudable. While the industry too is disappointed with the country not being able to usher in the major tax reforms in the form of GST, we look forward to the new government to complete the task. ASSOCHAM would like to see a government which is stable and decisive so that India reverts back to 8-9 per cent growth sooner than later. For us, there are no choices than to grow at a rapid pace whichever political combination is voted to power.
Dr. Arun Singh, Sr. Economist, Dun & Bradstreet India
Containing the fiscal deficit at 4.6 per cent for the current fiscal year seems to bode well for the overall economy and fiscal consolidation. However, the implications of a lower fiscal deficit with reduced capital expenditure planned for a slow growing economy needs to be evaluated cautiously.
We hope that the new government is able to provide the much required boost to the manufacturing sector, thrust to the infrastructure sector and upgradation of the foods supply chain for the agricultural sector. The excise duty cuts announced for the capital goods and the consumer non-durables sector along with the automobile sector will help to bring some cheer to these sectors, although for the interim period.
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Some reductions in excise rates have been announced , in the context of significant slowdown and import threats in certain segments, notably a reduction in excise duty from 12 per cent to 10 per cent on capital goods and consumer non-durables, reduction of excise duty for the automobile segment (including commercial vehicles), as well as reduction in excise duty on mobile phones. These changes will hopefully have some effect in boosting these segments, particularly automobile, which is reeling under one of the worst slowdowns in recent memory.
Shachindra Nath, Group CEO, Religare Enterprises Ltd
Union Budget 2014/15 was expected to spring no surprises, stick to fiscal discipline as a theme, as macro fundamentals turn around in a gradual recovery. To that extent, the Budget has delivered on the whole, with a 4.6 per cent (2013/14) fiscal deficit improving to 4.1 per cent (2014/15), albeit on optimistic tax revenue estimates. Overall, subsidy burden has remained largely flat vis--vis the revised figures for 2013/14 of Rs 2.45 trillion, with food subsidy rising sharply to Rs 1.15 trillion as the food security bill comes into effect. Fertiliser and oil, the other two major heads, remain largely in control, even as they subsume deferrals. Barring surprises in the fine print, we do not expect the market to react negatively, given the expected trajectory of fiscal consolidation seems to be on track.
Dinesh Kanabar, Deputy CEO, KPMG India
The vote on account presented by the finance minister was on expected lines. The significant positive is the reduction of excise duties on capital goods (which should give an impetus to capital spend) and white goods (which should give an impetus to consumer spend). The Auto sector has a lot to cheer about. Clearly, with elections round the corner, the current proposals will be viewed as interim ones and their true impact will be felt when they are incorporated into the final budget. The FM deserves credit for containing the fiscal deficit at 4.6 per cent. The retention of the one year income-tax surcharge on individual assessees is surprising and a disappointment.
Nihal Kothari, Executive Director, Khaitan & Co.
The finance minister has announced reduction in excise duty for three sectors facing deceleration. The excise duty on capital goods has been reduced from 12 per cent to 10 per cent, on mobile handsets to 6 per cent and on automobiles of different kinds the reduction is from 2 per cent to 6 per cent. These reductions will be applicable till June 30, 2014. Customs duty has been reduced on non-edible oils used in soap making up to 7.5 per cent and exemption of countervailing duty on specified machinery for road construction has been withdrawn. Service tax has been exempted in the case of warehousing of rice and blood banks. The above changes will give some temporary relief to selected sectors. The much expected reduction in excise duty and service tax to revive manufacturing and the services sector growth has not found favour with the finance minister as he has given high priority to containing the fiscal deficit, but at the same time, providing subsidy to the food and fertilizer sectors in the election year.
Dr. Wilfried Aulbur, Managing Partner, Roland Berger Strategy Consultants
The reduction in excise duty gives the automotive industry much needed relief after many quarters of demand side challenges. This action of the government is welcome, but we reiterate the need to fix the basics of the Indian manufacturing model. We need good infrastructure (road, ports, etc.), reliable and competitively priced electricity and flexible labor laws that allow linkage between salary increases and productivity gains. Consistent policies must help to address the root causes of weak consumer sentiment such as high interest rates, stubbornly high inflation, and increasing fuel prices.
Fr. E. Abraham, S.J, Director, XLRI, Jamshedpur
It is heartening to note that expenditure on education has increased almost eight-fold in the last 10 years to reach Rs 79,251 crore this year. While the number of schools, colleges and universities have increased manifold in the last decade, it is definitely a matter of grave concern that a large number of the new educational institutions in the government sector have major lacunae vis-a-vis governance. This results in gross misapplication and wastage of public funding. It is high time that an audit of the education sector is carried out by the CAG (Comptroller and Auditor General) of India and corrective measures implemented to stem the leakage of public funds. As told to Arunima Mishra
C J George, Managing Director- Geojit BNP Paribas Financial Services
Even though the elections are round the corner, the finance minister has not attempted any kind of populist measure which is a positive for the markets. The reduction of the fiscal Deficit to 4.6 per cent, compared to the year's target of 4.8 per cent, is the result of the determined focus shown by the finance minsiter, which is in line with the assurances given by him to international rating agencies and the investing community. This has significantly improved the credibility of the finance minister globally. The reduction in excise duty for the capital goods sector and the automobile sector is well appreciated as these industry segments have been struggling.
Brijesh Mehra, MD and head of international banking, India and SE Asia, RBS
Commitment towards fiscal consolidation is commendable with the finance minister managing to stay well within the fiscal deficit target set for the year by cutting down on plan spending. The fiscal deficit target indicated for the next fiscal year is somewhat aggressive as revenue projections, both from tax and non-tax revenue sources seem a little stretched. And, despite the fact that the gross borrowings programme is quiet large. Reduction in excise duties for the auto sector, capital goods and consumer durables is a welcome step, and would provide some boost to these sectors. Capital infusion of Rs 11,300 crore in banks should also help improve the capital position of the public sector banks and is therefore beneficial from the financial stability perspective. Some degree of populism is visible in the interest moratorium on student loans. The steps outlined under the vision for the future also provide a guide to the key reforms required for raising and sustaining a higher level of trend growth.
Amey Joshi, senior analyst, India Ratings & Research (Ind-Ra)
India Ratings & Research (Ind-Ra) does not expect the excise duty cut on consumer durables to 10 per cent from 12 per cent to boost demand. This is because high interest rates and high Consumer Price Index continue to plague the sector.
The two per cent duty cut will result in some reduction in the range of Rs 200 to Rs 1,000 in the final prices of consumer durables costing between Rs 10,000 and Rs 50,000. The index of industrial production (IIP) for the consumer durables industry declined 12.9 per cent year-on-year during April-December 2013 as against 3.7 per cent for the same period last year. This was despite the finance ministry providing additional capital of Rs 140 billion - announced in the previous 2013/14 budget - to banks to enable them to lend in selected areas such as two wheelers, consumer durables etc. As told to Arpita Mukherjee
T V Narendran, MD Tata Steel, India and South East Asia
The government's move to provide relief to the struggling manufacturing sector augurs well for the steel industry. However, it needs to be noted that the industry'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 urgent need for a comprehensive review of the entire mechanism for grant of clearances (such as the environmental and forest clearances) to industrial projects in the country. In order to spark an industrial revival, the government needs to implement a time-bound, simple mechanism that is fair to all stakeholders, and encourages economic activity in the country.
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