New Delhi, July 10 :
India’s industry Thursday commended the first budget of the Narendra Modi government as pragmatic which would lead to a quick turnaround in growth.
“Through this budget the Finance Minister has set the ground for repair of the economy. There has been a mix of both short term and long term measures geared towards boosting confidence of all key constituents”, the Federation of Indian Chambers of Commerce and Industry (FICCI) president Sidharth Birla said in a statement here.
FICCI strongly welcomed what it described as the government’s “change in disposition” in favour of ending “tax adventurism”.
Finance Minister Arun Jaitley said in his maiden budget speech that the government will not change any of the tax provisions retrospectively and create fresh liability.
The government has lowered the eligibility limit for investments to get the benefit of investment allowance from Rs.100 crore to Rs.25 crore.
“This will give encouragement to the SME sector that is a key contributor to employment generation”, FICCI said.
The Confederation of Indian Industry (CII) voiced happiness at the budget proposals to encourage manufacturing through various measures such as opening defence, insurance, and e-commerce sectors to FDI, correct inverted duty structures and set up industrial clusters and promote entrepreneurship.
“The new government has activated a number of directional changes that would stabilize the economy, boost investments, and encourage savings with a view to reviving GDP growth to 7-8 percent in the near term”, CII said in a statement.
Energy players welcomed the budget’s strong focus on the critical power sector.
“Power reforms, including Rs.200 crore fund allocation, in addition to extension of the 10-year tax holiday and encouragement to banks for giving long-term loans to infrastructure is bound to give a boost to the ailing sector”, said Ratul Puri, chairman, Hindustan Powerprojects.
“Overall, enhanced focus on gas sector is key positive of gas transportation players (like GAIL, GSPL etc) and city gas distribution (CGD) entities”, said K Ravichandran, co-head corporate sector ratings, ICRA.
The government will set up 15,000 km of additional gas transport infrastructure and further exploit coal bed methane gas reserves, the Finance Minister said in his budget speech.
Independent analysts found the absence of a clear policy stand on how the government proposes to go about achieving the country’s energy security.
Rajrishi Singhal, senior geo-economics fellow at think tank Gateway House, said the 2014-15 budget showed the government’s lack of clarity in its foreign direct investment (FDI) policy.
“It seems to be a continuation of the previous government’s approach and, as such, is unlikely to inspire investor interest in the overseas markets,” he said.
Singhal said the budget should be viewed more as “a vision document” – one that tries to elucidate a road map for the next five years but leaves out specific measures on how to accomplish them.