Nandan Nilekani
CEO, president and managing director, Infosys Technologies

"We welcome the focus on the social sector and agriculture in the budget. Liberalisation has marginalised a large percentage of our population from the benefits of an open economy as they lack the skills to take advantage of the same. We similarly welcome the focus on children's education, national midday meal scheme, basic health care, drinking water, group health insurance scheme. The education cess is a welcome move. This budget, however, lacks the required focus on infrastructure.

One area where the budget stands out is in reducing the revenue deficit to 2.5 per cent of GDP and reduction in the fiscal deficit. This should improve the fiscal condition and release funds for development in the future.

Abolition of excise duty on computers will help education and improve productivity. Overall, it is a good budget considering the time constraints, the government had to formulate its budget. "

• This government will not be bogged down by ideological shibboleths that impede reforms.
• This government will not be blind to the needs of the underprivileged and the marginal citizen and will do micro management. This may not be the Western reform model, but this is the Indian way of reform.

The first message comes through clearly in announcements such as

• Relaxing foreign direct investments in telecom, civil aviation and insurance
  
• De-reservation of small scale industries
  
• Even "privatization" of public sector units (PSU)

In support of the second message, there are several India specific solutions, including

• Health insurance schemes, fine tuned and better targeted to the needy
  
• Rural credit. Facilitation rather than one time sop for self-sustaining growth is a welcome change. Quantification of outcome, not just input, and fixing responsibilities on institutions shows pragmatism. The new focus on the agricultural / rural sector is in line with the common minimum programme (CMP) and recognizes its role in a consistent gross domestic product (GDP) growth of around 8 per cent.

The finance minister has addressed the issues of the needy, not just by giving them fish, but there were simultaneous attempts to teach them fishing. Developing skills through ITIs; National Competitiveness Commission for manufacturing industry are very relevant capacity building measures.

If the budget appears in many parts incremental, it shows continuity of programmes that have worked and hence need not be 'tinkered with". That the finance minister has been able to balance the demands with a lower revenue deficit is creditable.

For the auto industry, there was good news:
First, step up of public (Plan) expenditure by Rs.10,000 crores will stimulate demand for commercial vehicles. Stepping up defence budget is again very welcome; since the Indian auto industry is poised to take an increasingly larger share of defence spend.

Second, the finance minister signaled the continuation of the soft interest regime. Since auto demand is buoyed by soft credit, this is very positive news.

Third, the introduction of the value added tax (VAT) from April 2005 will add to the competitiveness of the auto sector, although in implementation, there should be no obstacles.

Fourth, MODVAT of service tax is a far reaching step.

Last, the weighted deduction of R&D expenditure is a recognition of the challenges facing the auto industry.

In summary, strong broad brush strokes, with selective delicate touches.

Welcome shift to rural focus
Arun Firodia
Chairman, Kinetic group

I welcome the government's determination to follow the Fiscal Responsibility Act. The government has taken a welcome step to reduce the revenue deficit to 2.5 per cent of the gross domestic product (GDP) and are well on our way to eliminate it by the year 2007.

There is a welcome shift and emphasis from urban and industrial sectors to long neglected rural and agricultural sectors. The urban sector is able to look after itself and it is good that it is left alone. When rural sector prospers, urban sector will automatically prosper because it will find an enlarged market for goods and services that it produces.

The automobile industry welcomes 150 per cent depreciation on in house research and development (R&D). This will enable Indian auto industry to enlarge its product offering and improve exportability. Even foreign auto companies will be encouraged to shift their R&D centers to India and make India an automobile R&D centre of the world.

However, infrastructure development does not seem to have received the priority it deserves.

Making service tax cenvatable is a welcome step and a step in the right direction in harmonising all taxes and duties and making them compatible and finally there will be a single tax that will be VAT in place of plethora of taxes.

Abolition of the long term capital gain tax as another welcome measure as it will enable people to invest in stock market now and enjoy returns during retirement.
It is very heartening that the government is giving high priority to water harvesting and water body management . I think, government should also give equal priority to water recycling especially in urban area.

Considering short time at his disposal, the finance minister has rightly postponed major reform decisions to the next budget. However, I think the next budget will be worth waiting for as it will set the course for period upto year 2015 which has been marked out as date of destiny.

All in all it is a well balanced and moderate budget with promise to better things to come.

Jagdish Khattar
President, Society for Indian Automobiles Manufacturers (SIAM)

The Budget provisions would strengthen the manufacturing sector and also carry forward the second generation reforms. These measures are likely to have positive impact on the economy both short term, long term and fuel growth.

The budget announcements would enable customers in a way that they would be able to spend more which again is a good sign.

SIAM welcomes the steps that would increase demand for automobiles by -increased buying power, increased allocation for defence, retention of the existing interest rates and improved rural financing facilities as significant percentage of vehicles are financed.

The increase in the income tax exemption limit to Rs. 1 lakh would provide fillip to demand for 2-wheelers.

The reduction in cost of manufacturing due to reduction in customs duty on non-alloy steel from 20 per cent to 15 per cent and alloy steel from 15 per cent - 10 per cent will make manufacturing more competitive.

SIAM welcomes the government policy of reducing the required increase in installed capacity from 25 per cent to 10 per cent for availing benefits under section 32(1) of Income Tax Act. This would enable industry to expand capacity which is critical at this stage.

The inclusion of the automotive sector in the list of sectors which enjoy weighted deduction of 150 per cnet under section 35(2AB) of the Income Tax Act is a welcome step. The increase in cess allocation from Rs50 crore to Rs72 crore for automotive R&D is a move in the right direction.

The move towards strengthening the infrastructure including roads, finance, and marketing facilities, would go a long way in providing thrust to the rural sector and reviving the overall economy. Industry welcomes the announcement that VAT will be introduced from 1st April 2005. It has been a long pending demand of the automobile industry and the other manufacturing sectors in the efforts/endeavours towards becoming globally competitive.

The setting up of a National Manufacturing Competitiveness Council is a pragmatic move and would facilitate sustainable development of manufacturing through industry sectors specific policy initiatives.

However, SIAM hopes that all the states would follow a uniform legislation for VAT mplementation, in order to avoid any marked deviations/discrepancies. The central government need to reduce central sales tax from 4 per cent to 2 per cent.

Acquisition cost of steel, an important input for the automobile industry, needs be brought down and therefore the industry welcomes the announcement of lowering the customs duty on non-alloy steel and on alloy steel. The introduction of a 2 per cent cess would increase the cost of vehicles which the companies may or may not pass on to the final consumer.

The industry hopes that four critical issues namely, reduction in excise duty on cars and multi utility vehicles; greater emphasis on augmentation and up-gradation of test facilities for testing and certification of automobiles, a vehicle retirement and fleet modernisation to address the issues of road safety and air pollution caused by ill- maintained in-use vehicles and fiscal incentives for alternative energy driven vehicles which have not been addressed completely in this Budget would be addressed by the government in the near future.

S. B. Ganguly
Chairman, Exide Industries Limited

It is a social budget. The finance minister has focused on education, health, agriculture and employment generation. He wants rapid growth in the rural economy. He has tried to implement the common minimum programme of the UPA governmnet and it is expected to be good for the country as a whole.

There is not much for industry and he has not changed too many things as this budget is for 6 months only.

Specific to automotive & industrial batteries segment:
Duty on non-ferrous metal is being brought down from 20 per cent to 15 per cent. The 5 per cent reduction will help our industry as duty on lead will come down to 15 per cent now. Duty exemptions on automobile R&D are also encouraging.

Anuroop 'Tony' Singh
CEO and managing director, Max New York Life Insurance Company Limited

Welcome in FDI limit in insurance sector
The hike proposed by finance minister P. Chidambaram in the sectoral cap in insurance is a welcome development and will drive further growth in insurance. The raising of foreign direct investment (FDI) cap to 49 per cent from 26 per cent is bound to fuel the growth of life insurance in the country.

It will benefit all constituents viz., the country by bringing in valuable foreign investment and creating employment opportunities; the policyholders by ensuring that they get access to better products and better service standards; the foreign investors by demonstrating that India is a fair place to do business and by signalling the continuing pace of insurance reforms; and the progressive stand will benefit life insurance companies by reinforcing commitment of both joint venture partners and by enabling them to scale up their business in India.

On the pensions front, Chidambaram's budget provides ample indication that the pension reform process is being fully thought through and we welcome that. Our view is that p ensions are an extension of the financial relationship that life insurance companies have with customers. There are huge overlaps in pension and life insurance products and those synergies should be ably harnessed and all life insurance companies should be allowed to participate in pensions.

The government to introduce longer-term central government bond to support annuities, of upto 50 years tenure. Existing assets are shorter term (15 years or less) and therefore it is not possible to accurately price annuities.

The should be tax benefits to encourage pension products. It is disappointing that tax benefits available under Section 80 CCC(i) have not been enhanced in line with the Kelkar committee recommendations. At present a ceiling of Rs. 10,000 is prescribed for deduction from gross income for investments in any pension product. The regulator and the private insurers both have proposed that the exemption on pension savings be hiked to Rs.40,000.

The proposal to enhance the service tax rate from 8 per cent to 10.2 per cent, including the 2 per cent cess, is a detrimental step for the life insurance industry and there is every reason for it to be rolled back. The tax is an unexpected burden and it goes against the basic tenets of life insurance, which people buy to provide protection to their families.

In a country like India, where social security options are non-existent, imposing service tax can severely impair the ability of the industry to grow. Further the tax hike penalises genuine life insurance and skews it towards savings-oriented life insurance. Finally, it is going to be administratively cumbersome and complex to implement because life insurance premiums vary depending on the age of the policyholder and the tenure of the contract.

Sam Ghosh
Country manager, Allianz & ceo, Allianz Bajaj Life Insurance Company Limited

Section 80 CCC benefits could have been hiked
The increase in foreign direct investment (FDI) limit to 49 per cent is certainly a welcome gesture. Allianz has always considered India as one of the strategic markets in Asia Pacific.

The enhancing of FDI limit would only increase Allianz's commitment to develop the insurance market in India with a renewed vigour.

The finance minister's decision to pass the necessary bill for setting up of Pension Funds Regulatory Development Authority is a positive signal. We hope that this would open up the pension sector. We would be entering this sector at the earliest.

The increase in service tax would dampen the demand for life insurance. However the increase may only be partial as it is only on the risk component of the premium. This will be put a burden on life insurance companies in terms of management information systems (MIS), as now they will have to bifurcate the premium components accordingly.

The levying of 0.15 per cent turnover tax on investment will be a burden on the cost of management of investible funds. And finally we had expected the increase of the limit from Rs.10,000 to Rs.35,000 or higher for benefits under Section 80 CCC of the Income Tax Act which would have increased the pensions market.

R Ramaraj
Managing director & CEO, Sify Limited

Service tax a retrograde step
Increase in foreign direct investment (FDI) in the telecom sector is a welcome step and will contribute to growth and development of the industry. Exemption of excise duty for personal computers is in the right direction. However, the industry would welcome import duties being decreased for computers and other access devices, to bring their prices down.

The continuation of service tax and its increase from 8 per cent to 10 per cent, especially for the cyber café industry where even 8 per cent is counterproductive, is a
retrograde step. Increasing the service tax to 10 per cent and not doing enough to
bring down the prices of access devices like personal computers will result in decrease in number of Internet users rather than encourage them.

Overall a good maiden budget, but I hope the finance minister will look into removing service tax completely for the cyber café industry.

Gautam Chadha
Chief executive, TIRUN Travel Marketing, India representative-Royal Caribbean Cruises Ltd.

Overall it is now clear that this government will pursue policies as mentioned in their common minimum programme (CMP), hence skeptics need to take a break. The emphasis on agriculture, farm and rural is long overdue and we will all see the benefits in the years to come.

The determination to push through contentious initiatives like increasing FDI in sectors like civil aviation is indeed welcome as this sector needs funds, expertise and management. Obviously much will depend on success

Pawan Munjal
Managing Director, Hero Honda Motors Ltd.

After several years, the Union Budget (of Mr Chidambaram) is addressing agriculture and social sectors comprehensively.

Agriculture, education, health and food security are the main areas where solid proposals have been brought in. Industry has been selectively benefited. The Budget for 2004-05 has made a good beginning to realise the components of the National Common Minimum Programme (NCMP).

The second major exercise has been to create institutions like The investment Commission, The Manufacturing Council, etc. which can efficiently implement the programs of the Government.

Another commendable thing is that the FM has been able to increase resources just by adding a cess of 2%, without disturbing much the existing rates.

The areas which have not been convincingly addressed are growth and employment. Since this budget is for 6 months only, not much can be expected.

As far as the automobile sector is concerned, steps like depreciation on investments for capacity expansion, tax exemption on R&D, excise concession on tractors and ambulances and duty reduction on steel, will further boost the booming industry.

Overall, the FM has been able to balance the objectives of NCMP, revenue drive and expenditure discipline, thereby sowing the seeds for reorienting the economy towards growth and stability.

K R Kim
Managing Director, LG Electronics India Private Limited

The union budget 2004-2005 is a growth driven budget. The efforts of the government towards sustaining a 7-8% growth rate is encouraging. The government's focus on the development of the semi urban areas is threatening, as they are critical markets for the
economy. Another positive initiative has been the implementation of the value added tax, which will lead to an integration of the markets and in the long run will help in streamlining the operations.

The removal of the tax anomaly with the merger of service tax and excise duties is also beneficial in reducing the service expenses on manufacturers.

The need for a calibrated policy to improve the investment in the country has been met with a clear focus. The minister also announced initiatives for strengthening infrastructure in the country, which will boost the economic growth. I am also happy with the support extended to the IT and Telecom sectors. It was also essential to protect the interests of the manufacturers and the creation of the Manufacturing Competitive Council is encouraging as it will have a critical role to play in boosting the investments both from thedomestic and the international players.

Harsh Goenka
Chairman, RPG Enterprises

The Finance Minister has presented a budget that should promote growth with stability and administer equity at the same time. The emphasis on agriculture, agro-processing industries and employment generation are clearly evident. With the limited time at his disposal a full review of the tax system was undoubtedly difficult. But a beginning has been made with the increase in exemption limit in respect of income tax and a restructuring of capital gains taxation. Short term capital gains will be taxed at 10 per
cent and long term capital gains taxation will be replaced by a transaction tax. Though the markets have shown a knee jerk reaction, I am hopeful that the new system of capital gains taxation will motivate the investor and gradually give a lift to the markets.

Concern about the pace of investment and competitiveness of industry is evident. The setting up of an Investment Commission and the National Manufacturing and Competitive Council will help create a better environment for investment, both domestic and foreign, and enable industry to measure up to world standards. FII investment has been a source of support to the stock market and to foreign exchange reserves and therefore the simplification of procedures and increase in foreign investment limits in telecom, civil aviation and insurance is a good sign for the markets as well.

The budget provides for Rs.12,450 crores increase in capital expenditure and at the same time reduces the revenue and fiscal deficits substantially. These measures will help stabilise interest rates and at the same time stimulate industrial growth by generating additional demand. The budget is a step towards achieving the expected 10 per cent growth in industry and 7-8 per cent growth in GDP.

It is a visionary and forward looking budget. So I don't expect any immediate fall-out. If implementation of these initiatives keeps pace, it should result in a quantum growth in the economy through a robust agri sector and a resurgent industrial sector from which all stakeholders in the economy will benefit

Indrajit Gupta
Managing Director & ceo, SBI Capital Markets

Ltd.The maiden budget of the Congress led UPA government is continuity of reforms with a human face. It seeks to reduce poverty & unemployment through improvement in healthcare & education, strong impetus to revitalize & grow agricultural-rural economy and increased spending on infrastructure projects. All of which are expected to have long lasting positive effects on growth of the economy.

The introduction of educational cess of 2% on taxes and duties will improve the educational infrastructure particularly in the rural areas. The additional allocation of Rs. 10,000 crores for Gross Budgetary support for plan programmes in rural sector will give a boost to growth.

This will be facilitated further by increased coverage under Antyodaya Anna Yojana from 1.5 crores to 2 crores families. The linkage of govt. funding to adoption of new governance standards in RRBs will increase competitiveness and increased credit to the farm sector. The intention of doubling farm credit over the next 3 years will drive spending in the rural economy.The formation of inter- Institutional Group (IIG) formed by IDBI, IDFC, ICICI Bank, SBI, LIC, BOB and PNB will speed up completion of infrastructure projects.

The increase in FDI limit in Telecom, Civil Aviation and Insurance are big positives, as it will attract huge investment and spur M&A activity. These are very significant positive developments.The 100% rebate on taxable income of upto Rs. 100 000 will cover a large base of the tax paying consumers and is expected to spur consumer spending.The simplification of FIIs registration increase in FII's investment in debt limit from USD 1 billion to USD 1.75 billion and abolition of long term capital gains tax on securities is positive for the capital market and will definitely give a positive thrust investments
from FIIs especially in the telecom sector.

Percy Siganporia
Managing director, Tata Tea Limited

The general budget in terms of continuity is a well-balanced effort which continues the current economic agenda with two major initiatives. The nurturing and fostering of rural India, the weaker sections of society and the low middle class have provided a fillip to potential growth to tea consumption after a lag of 6/8 months. The threat to balance the deficit is exemplary and sets the economy up for the next fiscal budget.

Expectations for next year require a better economic activity stimulating budget to be presented.

The increase in the FDI limit by the government is a welcome move. The Indian insurance industry has a huge untapped potential. Insurance as a business requires regular capital infusion. The raising of the equity cap will not only bring more money but also help in expanding the industry.

Currently of the Rs 3,179 crore capitalisation of private life insurance companies only Rs 827 crore is FDI. By making it 49% the figure would be Rs 1,558 crore. It will also allow the foreign shareholders to demonstrate an even higher level of commitment to India. Insurance has a long gestation period to break even. It requires a long-term commitment on the part of the players as well as a significant investment.

With the increase in the equity limit, many more foreign insurers would be interested in entering the market, resulting in further expansion of the life insurance market along with offering a wider choice of products and services to the customer.

Uday Kotak
Executive vice chairman & managing director, Kotak Mahindra Bank

The finance minister's budget is bold and forward-looking. He has focussed on the right sectors namely agriculture, education and healthcare. His positive approach towards investment is welcome and his opening up of FDI in telecom, civil aviation and insurance is a step in the right direction.

Aligning the capital and the commodities market is in tune with global reality. He has also taken a positive step forward on disinvestment.

As regards the area of turnover tax on securities, a rate of about .03% instead of .15% may have been more appropriate to ensure that the turnover tax does not affect liquidity.

All in all it is a positive budget reassuring global and domestic financial community on the continuity of the reforms process.

Vinayak Deshpande
Managing director, Tata Honeywell Limited

"Overall a positive budget. The budget gives a tremendous boost to rural infrastructure and agriculture sector. A lot of sops have been announced for automotive R&D, IT, Biotech and health sector. FDI limits have been increased in telecom, insurance and civil aviation, which is a positive step forward.

From Tata Honeywell's perspective, the company will benefit by increased spending by organisations, lot of which will go into upgradation and automation specifically in the agriculture, power, civil aviation and shipping ports sector.

The development of core infrastructure has a lot of say in this budget, the manufacturing sector has got a fillip and there is also mention of bill to regulate Special Economic Zones (SEZs). This is a sure sign of progress and development.

Harsh Roongta
CEO, Apnalaon.com

The big story in the budget for the retail consumer directly would have been the hike in the exemption limit from Rs. 50,000/- to Rs. 1,00,000/-. Alas the fine print made it clear that the benefit was restricted to those whose total taxable income did not exceed Rs. 1,00,000/-. So if the total taxable income is Rs. 1,00,001/- then you are not eligible for this benefit.

The projected revenue deficit (assuming the final numbers are in line with the projections) should also ensure that the general interest rate regime remains stable and the widely expected interest rate increases for home and other consumer loans, if any, in the near term may be only marginal.

In fact the Macroeconomic Framework Statement mentions a sustained benign interest rate regime as one of the underlying assumptions for this year. Otherwise there was a sigh of relief that the existing tax structure (apart from the 2% education cess) in general and the benefits available with respect to home loan repayments in particular were not touched. The finance minister has promised to revisit the entire tax reform issue in or around the Budget 2005 which is when we will see more action on this front

Narayan SA
Managing director, Kotak Securities Ltd

The budget has given signals that the focus on reforms will continue. The increase in the FDI limit on telecom, aviation and insurance is a definite step towards that. The target of raising Rs. 4000 crores by disinvestments is a positive statement. Exemption of tax for long-term capital gains and 10% tax on short-term are encouraging. But 0.15% tax on securities for purchases both on cash and F&O market is a dampner and will effect the liquidity of the markets due to lack of participation from day traders and arbitrageurs.

Ajay Bagga
CEO, Kotak Mahindra Asset Management Company

From a macro-economic perspective, it's a positive budget, which will be viewed as growth-oriented, fiscally responsible and a continuation of the reforms process.

The focus is on rural growth, infrastructure, healthcare, education, employment generation, FDI in key sectors and facilitation of FII inflows. The finance minister has done a fine balancing act by increasing Plan capital expenditure, targeted subsidies, financial support to States and rural credit, while holding the revenue deficit at 2.5% of GDP and fiscal deficit at 4.4% of GDP.

Expansion of the service tax base and increasing the service tax rate to 10% are continuations of the reform process.

With regard to capital markets, simpler registration for FIIs, increasing FIIs' debt limit to US$ 1.75 billion and increasing FII limits in specified sectors will attract incremental FII inflows. FDI hike in telecom, civil aviation and insurance will lead to capital inflows and boost infrastructure spending. The other positive messages are the implementation of VAT by the next fiscal, the commitment to pension reforms, modification of the Securitisation ACt and focus on agricultural

I.A Modi
Chairman, Cadila Pharmaceuticals Ltd.

The exemplary work done by the Indian pharmaceutical industry has totally missed the attention of the finance minister while presenting the budget for the year 2004-2005. It seems that, the concessions to the farming sector has over shadowed the pharmaceutical sector.

The following important factors should have caught his attention : The pharmaceutical industry today is growing at a commendable speed and particularly it is making deep inroads into the developed countries, where the earnings are substantial.

From 2005 when the WTO comes into effect, the existence of the industry largely depends on research. pharmaceutical research shall have to be strengthened more and more to capture the developed markets through newly expiring patents and new molecules discovery.

To exploit the patent expiry market, the Pharmaceutical research should have sufficient fund, to address the issue through non- infringing processes where the Indian pharmaceutical industry has done commendable achievement and a large number of molecules have already been registered in the developing countries. The Indian pharmaceutical industry has been starving for research funds due to the drug price control order (DPCO) though the medicines manufactured in India are the cheapest in the world.

The finance minister should have paid enough attention to reduce the unwanted hurdles of DPCO. The Mashalkar Committee has way back submitted a report to over come the research fund crisis of the pharmaceutical industry which has not made any progress so far and the finance minister would have looked to it seriously to strengthen the efforts of this knowledge based industry.

The weighted deduction incentive to specified industries - such as pharmaceuticals, electronics etc. on in house R & D activities which has been instrumental in promoting much needed research to sustain in the world market, expires on 31-03-2005. This weighted deduction should have been extended further, to encourage and expand the good research work being by these Industries.

The deduction in respect of exports (for Exporters other than to EOUs etc) has been available to assesses. This has expired on 31-03-2004 and there were indications and expectations for the revival of this incentive to enhance the exports, however the revival of the same has also been ignored.

Vishwavir Ahuja
Managing director & ceo, Bank of America

The business agenda of the UPA government has been laid down in the common minimum programme (CMP). The FM has presented a populist budget, with many sops for rural development and other pro-poor welfare schemes. Rural credit is slated to double over the next three years and the proposed measures will also provide an impetus to agri-based industries.

Expenditure on subsidies and defense is also sharply up. As the financial commitments for the CMP are likely to be high, the focus of budget 2004 has been on garnering the required resources.

We had anticipated the Kelkar Committee blueprint, to be implemented in the Budget, which would essentially simplify the tax structure, cut widespread tax exemptions and widen the net. However, these recommendations have largely been ignored, with the exception of increasing the tax- exempt slab to Rs. 1 Lakh.

As indicated by the FM, most of these measures are likely to be addressed in the next budget, which is a mere seven months away. The finance minister has addressed the market's expectation of no drop in the interest rates of certain small savings instruments and has also endorsed the continuation of a 'benign' interest rate regime, albeit, aligned to market realities. We expect interest rates to rise, as credit and investment demand is likely to go up amid higher growth.

Mixed signals have been sent to the capital markets. While the capital gains tax structure has been revamped and banks have been allowed to enhance capital market exposure, the levy of a turnover tax on stock transactions and a 2% cess on taxes will dampen market sentiment.

On a more positive note, the steps to increase foreign direct investment in telecom, aviation & insurance, the setting up of an investment commission to attract FDI are welcomed. The Indian economy is on a firm growth trajectory, with a GDP growth rate of 8.2 per cent in 2004, compared to a mere 4 per cent in the previous fiscal.

The Budget seeks to maintain the momentum over the next few years. The projected fiscal deficit of 4.4% however appears ambitious, as there has been no focused attempt towards fiscal consolidation, a lack of which, could lead to higher public debt.

As expected, given that the government has been in office for less than three months, the FM has steered clear of radical policy changes in the budget. The FM has come out with an economic package that should hopefully lead to sustainable growth, generate employment and pave the way for better industrial performance.

R. Ramakrishnan
President and coo, Bajaj Electrical

The budget is very welcomed in terms of its focus on the crucial agenda, rural upliftment and agricultural sector.

The direction of the government has been chartered out well in line with the CMP. However, there are some serious concerns. There is insufficient clarity on mobilizing additional resources to meet the requirements of funding for the social and rural agenda.

The budget was silent on cutting unproductive government expenditure. We were expecting more focus on kick starting investment. The issue of the reservation of items from the SSI list has also not been touched upon. There has been inadequate emphasis on cutting unproductive subsidies. There should have been greater emphasis on foreign direct investment in the manufacturing sector to spur export led growth. The greater thrust to special economic zone was also required.

On the whole, the budget clearly reflects the tight rope walking done by the FM but at least the long-term agenda is positive

Habil Khorakiwala
Chairman, Wockhardt

Great balancing act, Government has not allowed Left to hijack budget Budget

Union finance minister P Chidambaram has done a fine balancing act by addressing the concerns of the Left and continuing with liberalisation and reforms. He has belied fears that the Left will hijack the budget and send the wrong signals.

The minister deserves kudos for a slew of innovative schemes to uplift the rural population, such as water management programme, tax holiday on food processing, food stamps and agricultural insurance.

The 2% cess that will yield Rs. 5,000 crores a year for education is a gigantic leap if implemented properly. In fact, the budget has set the right directions in terms of priorities and allocations. The acid test will be in execution. The real challenge is to see that the
benefits of the schemes reach the intended people.

At the same time, he has sent the right signals to the industry and world at large by raising the foreign direct investment cap in key sectors like telecom and airports. We are disappointed that there is nothing in this budget to promote R&D in pharmaceutical
sector, which the industry expected and deserved, against the background of the new patent regime beginning on January 1, 2005.

The Finance Minister has provided incentives to R&D in automobile sector but left out pharmaceuticals. I hope he will make amends for this omission before long.

It is a social budget. Honourable finance minister has focused on education, health, agriculture and employment generation. He wants rapid growth in the rural economy. Honourable finance minster has tried to implement the common minimum program of the UPA government and it is expected to be good for the country as a whole.

There is not much for industry and he has not changed too many things as this budget is for 6 months only. specific to automotive & industrial batteries segment: Duty on non-ferrous metal is being brought down from 20% to 15%, this 5% reduction will help our industry as duty on lead will come down to 15% now. Duty exemptions on automobile R&D are also encouraging.

Balwant Singh,
Managing director, Gujarat Narmada Valley Fertilizers Co. Ltd.

While the common interest in budget surrounds the sectoral gains and losses it creates, the serious student looks for more lasting impact of a budget. From that viewpoint, this year's budget has done a commendable job to send the signals about the long-term priorities of the government for all round growth.

The road map charted for rural and agricultural reforms is bold and revolutionary. However, its success lies in implementation and could result in the tremendous boost of a level demonstrated earlier by the service sector. GNFC is also an agri-input company and we see a great future for ourselves in the well-being and welfare of Indian farmer.

Though budget is silent on interest rate and inflation and the deputy governor of RBI has hinted at the direction for both these remaining unchanged and on course, one might keep the fingers crossed with additional two percent surcharge on all union government levies, a 25% increase in service tax as well as its widened net and the rise in steel prices, all of which could push the costs up.

Our chemicals business will see the impact of proposals when full details are known, but the reassuring part for the present is the finance minister's thrust on competitiveness of Indian industries vis-à-vis its ASEAN counterparts.

With just seven months to go before the next budget, much would depend upon a good monsoon, committed implementation and widespread support to this magnanimous and ambitious agenda to set the stage for a real take off.

Javed Tapia
Director, Red Hat India

" Exemption of computers from excise duty by the government is a very welcome move. This will make PCs more affordable and hence increase PC penetration. This move will also play a significant role in proliferation of Information Technology and bridging the digital divide in the country."

Nasscom welcomes budget initiatives
The National Association of Software and Service Companies (NASSCOM), the chamber of commerce of the IT software and services industry in India, has welcomed the overall thrust of the union budget. In a statement issued to the media the association has welcomed the government's move to set up an investment commission to attract foreign investments into the country.

In a statement Kiran Karnik, president, said, "The union budget is a positive and growth-oriented budget. We are happy with the focus on infrastructure and education, as also the positive signals to the telecom industry. All these are of critical importance to the IT industry. We welcome the exemption of excise duty on computers. This move by the government will further enhance and provide a strong stimulus to computer penetration in the domestic market."

Adding further he said, "At the broader level, we will be happy to join hands with the government in leveraging technology as a tool for transformation. IT can play an important role in promoting agri-businesses as well as making food stamps a reality by ensuring efficiency and transparency. We suggest a similar entitlement based system for education too."

NASSCOM also welcomed the government's thrust on airports and power sectors. An increase in the foreign direct investment (FDI) limit in the telecom and civil aviation sector to 74 per cent and 49 per cent respectively, will not only bring new investments and improve the infrastructure but also ensure that India continues to maintain its competitive edge.

However Nasscom has expressed its disappointment on the non resolution of the issues related to taxation of the business process outsourcing industry.

Sanjiv Goenka
Chairman, RPG

I am very happy with the budget. It is a development-oriented Budget. It will give a boost to the capital markets as relief has been given to capital gains.

Its focus is on investment and growth. Caps on foreign investment in the civil aviation, telecom have been removed and it will give a boost to these areas.

The only disappointment I have is that I would have expected at least a directional statement on labour.

The last time I gave the Jaswant Singh Budget ten out of ten. I will give Chidamabaram 9.5 out of ten.

Sunil Bharti
Chairman, Bharti Telecom

This is a path-breaking budget. It is an extremely well thought out budget and it goes deep into the rural areas and touches the lives of most citizens.

I am very pleased that there has been major thrust at the grassroots level. The increase in the foreign investment allowed in the current budget will give a major boost o the telecom sector.

Telecom is a highly capital intensive sector and by removing the cap on investment the finance minister has removed a major hurdle in the expansion of the Indian telecom companies.

Arun Bharat Ram
Vice chairman, SRF Ltd

I think that by and large it is a good budget considering that the finance minister was under so much pressure from the prescriptions of the CMP.

My concern is whether the government will be able to curb its fiscal deficit to what the finance minister has promised. On the other hand, the finance minister has increased the service tax and broadened the net and this will bring in revenue to fund his social sector commitments.

But another concern is the delivery systems, because it has been our experience that a lot of announcements and promises are made but when it comes to implementation and targeting the government is not up to the mark I am disappointed that there is not much in the way of privatisation though we did not have much expectation in the first place.

For the banking sector, the modifications in the Securitisation Act is going to go a long way in releasing much-needed funds. Also welcome is the setting up of the Infrastructure Fund and the emphasis on the rural sector.

Knowing Chidambaram, he would have done away with a lot of exemptions but it looks like many new exemptions have been added.

I think that there is definite political pressure and with only a month or so available to formulate the budget, I do not think that the finance minister could have done anything more or different.

As he said, this budget should be considered more of an interim Budget and I am sure that the next Budget would see a consolidation of the measures he has announced today.
Maybe the next Budget will make the general direction that is lacking in this Budget more clear.

Phiroz Adi Vandrewala
Executive vp, TCS

The IT industry had no major expectations from the budget. Our issues have been resolved in the past budgets. We had requested the finance minister to maintain status quo, which he has done.
There were commitments for long-term tax cuts and the finance minister has continued with that. So, we have no budget issues, but operational issues will be take up with the government from time to time.
As an industry, we are growing at 30 to 35 per cent and we see no reason that the IT industry will not keep that going. We are adding about one-and-half-lakh jobs per year, that will continue.

Vimal Kumar
Finance director, Shasun Chemicals And Drugs Ltd.

Overall the budget is disappointing one.

Considering the new government at the centre that has taken over the reign recently nothing great was expected out of the budget exercise for the year 2004-05. The finance minister was also bound by the common minimum programme. The budget focussed more on social reform measures.

Salaried people got a boost by enhancing the exemption limit to Rs 1 lakh. The stock market reacted badly at first towards turnover tax but I feel it was a good move to avoid lot of tax litigation and the same is built in the cost of the transaction. Reduction in STCG to 10 per cent is a welcome sign. However, the budget overall was disappointing one, in my opinion, for the corporate world for not considering reduction in corporate taxes and also there is no special incentive for green field projects (although the finance minister did provide for additional depreciation for expanding the capacity by minimum 10 per cent.). Pharmaceutical industry status has remained the same. The expected export incentives in the form of extended 80HHC did not come through.

Kamesh Goyal
CEO, Bajaj Allianz General Insurance Company Limited

We definitely welcome the increasing of foreign direct investment (FDI) limit to 49 per cent, which was a long standing demand of the industry. Though both our joint venture partners Allianz and Bajaj Auto Limited were working as equal partners since inception, the increase in the limit would reflect that in ownership.

The increase in service tax by 2 per cent to 10 per cent will disappoint customers of personal insurance products, however for corporate customers, service tax they pay will get set off against excise duty paid which will make general insurance needs cheaper for them.