The Hindu Business Line : Thursday, March 01, 2007

AUTOMOBILES
Carmakers express disappointment over `exclusion'
The absence of the mention of the automotive sector in the Union Budget has disappointed the domestic industry, which had been looking forward to excise duty rationalisation on passenger cars. In fact, a few companies have already finalised a ... More

Toyota disappointed
Toyota Kirloskar Motor has termed the Union Budget disappointing as it has not addressed the auto industry's plea for 16 per cent uniform excise duty for all passenger cars. "The automobile industry request of 16 per cent uniform excise duty ... More

Some positive features: SIAM
The President of the Society of Indian Automobile Manufacturers (SIAM), Mr Madhur Bajaj, said the auto industry had hoped for some more concrete steps in respect of the sector. The positive features, however, of the Budget ... More

BUDGET
Looking beyond market gyrations
Budget and stocks More

Many pluses and a few minuses: Chidambaram
In November 2006, the UPA Government crossed the midpoint of its term of office. A midterm report card can now be presented. There are many pluses and a few minuses, and I shall deal with both candidly. The biggest plus is that the growth rate ... More

MAT scope extended; stock options under FBT
On the corporate income tax (CIT) side too, there has been better compliance. Consequently, I propose to keep the same rate of CIT with one important modification. In order to encourage small and medium ... More

No recipe for agricultural renewal
It appears that agriculture not having to wait is an idea whose time is yet to come. More

Poster boys take a hit
The software companies, which have consistently enjoyed an exalted tax-free status, appear to have finally run out of luck. The markets that had been gearing up for an extension of the tax exemption beyond 2009-10 under Section 10A/10B were ... More

DIVIDEND TAX
Payout tap will not run dry
Top index constituents with significant cash coffers may choose to absorb the additional tax. More

Hike in dividend distribution tax upsets corporate sector
Negative impact on domestic companies feared More

`Exchangeable bonds will unlock value for corporates'
Global slide triggered decline in Indian stock indices: Chidambaram More

Dividend tax on MFs investing in money markets raised
The Union Budget has marked up the dividend distribution tax (DDT) on mutual funds investing in money market and liquid markets to 25 per cent for all investors. The Finance Minister said the funds enjoy concessional tax rates allowing for huge ... More

Lost fiscal ground regained
Thanks to the Fiscal Responsibility legislations, the Central Government and the State Governments have regained lost fiscal ground. Around Rs 1,10,268 crore of States' debt has been consolidated. Twenty States ... More

Income and savings
To continue with the report card, per capita income in 2005-06, in real terms, increased by 7.4 per cent, and the savings rate has been estimated at 32.4 per cent and the investment rate at 33.8 per cent. ... More

From cats & dogs, to instant food mixes... FM sails through
BUDGET SPEECH More

Small gestures for the small man
One doesn't know for sure whether the Finance Minister and his team burnt the proverbial midnight oil Tuesday night to assuage, in the wake of the dawning realisation reinforced by the electoral reverses in two States, the badly mauled feelings ... More

`Duty cuts not to benefit common man'
The Sindhi Chamber of Commerce has expressed mixed reactions on the Union Budget 2007-08. According to a release, while excise and custom duty reductions are aimed at curbing inflation, they are unlikely to benefit the common ... More

Balanced Budget: Chambers
Hike in Central excise exemption for SSI welcomed More

`A positive Budget'
On the whole, it is a positive Budget. The direction is correct and on desirable lines. The impact of the levies proposed will iron itself out in the overall scenario during the course of the year. The Finance Minister had a difficult ... More

Bharat Nirman and flagship programmes
Bharat Nirman remains the cornerstone of the Government's policy. I am glad to report that in the current financial year: * Additional irrigation potential of 24,00,000 hectares, including 9,00,000 ... More

Outlook on inflation
Until February 2, 2007, bank credit, year on year, had grown by 29.6 per cent. Money supply (M3) had expanded by 21.3 per cent. Foreign exchange reserves stood at $180 billion. While these are concomitant ... More

Consumer goods prices to stay put
If you thought the Budget would have that big bang effect on prices of consumer goods and durables, think again. Prices of most goods are going to stay put, say a host of manufacturers Business Line spoke too. But if they do a few months ... More

Newer avenues for financing infrastructure
Electricity generation has recorded a growth rate of 7.5 per cent in April-December this year. However, as we complete the Tenth Plan, we would have added only 23,163 MW of additional capacity in the five-year ... More

Defence, e-governance allocations hiked
I propose to increase the allocation for Defence to Rs 96,000 crore. This will include Rs 41,922 crore for capital expenditure. Needless to say, any additional requirement for the security of the nation will be ... More

The Budget team
(FROM LEFT) MR ASHOK LAHIRI, Chief Economic Advisor; Mr Vinod Rai, Secretary, Financial Sector; Mr K.M. Chandrashekhar, Revenue Secretary; Mr Ashok Jha, Secretary, Finance; Mr Sanjiv Misra, Expenditure Secretary; and Dr Parthasarathi Shome, ... More

Many warts on the face, says Seshasayee
The President of the Confederation of Indian Industry, Mr R. Seshasayee, on Wednesday gave "full marks" to the Finance Minister as a macro manager of the country, but said that when it came to taxation, there were many "warts on the face." He ... More

Well-balanced: Murli Deora
The Minister of Petroleum & Natural Gas, Mr Murli Deora, has hailed the Union Budget 2007-08 as well balanced and with focus on common man. In a statement issued here he said, "The Finance Minister must be congratulated for the . More

No comforting hugs!
With inflation ruling high and the economic growth story looking strong one would have expected the FM to extend at least some painkillers to the common man — unfortunately the hugs are for the dogs and cats and not for you and me! There ... More

Telecom tariffs to fall with single levy regime
But ringtones, downloads will get dearer More

Leaving them cold
Mythili Chandrasekar, Vice-President, JWT: My first response to a budget is always as a middle-class housewife. Whatever happens to petrol prices, my monthly petrol expenditures anyway seem to go always only one way, and that's Up. ... More

Central Plan outlay up 26% at Rs 3.19 lakh cr
The Central Plan outlay for the next financial year proposed in the Union Budget today showed a step-up of 26 per cent at Rs 3,19,992.08 crore, as compared with Rs 2,54,041.48 crore in the budgeted amount for the current fiscal. Of the Rs ... More

Fringe benefit tax on ESOPs disappoints IT cos
`It may end up burdening the employee more' More

Budget fully consistent with macro objective says Birla
Mr Kumar Mangalam Birla, Chairman, AV Birla Group of companies, said that the Union Budget was fully consistent with the macro objective of keeping India's economy on a high growth trajectory. But even while fanning the fires of growth, ... More

Budget & Rupee
More

Drugs sector unhappy with lukewarm treatment
Finance Minister Mr P.Chidambaram has not managed to seize the moment, according to heavyweights of the pharmaceutical industry. Though happy that Budget 2007-08 has extended the 150 per cent weighted deduction on expenditure incurred on ... More

Scope of service tax widened
Exemption limit for small service providers doubled More

A mixed package for oil and gas industry
More

Disappointing Budget, says Kerala CM
The Chief Minister, Mr V.S. Achuthanandan, has termed the Union Budget 2007-08 as largely disappointing. Speaking to newspersons here, he said the Budget had left both the crisis-ridden sectors of agriculture and cooperatives begging for any ... More

Budget a mixed bag, say Coimbatore industries
Positive impact on textiles, engineering sectors More

Sombre mood prevails as stock dealers gauge Budget
With the stock market taking a beating from the opening bell on Wednesday, the dealing room at Emkay Share and Stock Brokers Ltd's office in Worli was buzzing with activity ahead of the Finance Minister's Budget speech. Once the speech started ... More

`Overall impact is positive'
Though the Budget has some negative points, the overall impact is positive and growth oriented, according to Mr K. Annamalai, former President, Coimbatore Stock Exchange. He said the budget would trigger growth and would provide ... More

Plywood cos to gain from excise duty cut
The reduction of excise duty from 16 per cent to eight per cent as proposed in the Union Budget will not only boost domestic plywood industry but also encourage farmers to go in for timber plantation for increased consumption of timber by plywood ... More

Budget a mixed bag, say chambers
More

Tackling unemployment
The National Rural Employment Guarantee Scheme (NREGS) was launched on February 2, 2006. The pace of implementation varies from State to State. Since NREGS is a demand-driven scheme carrying a legal guarantee of employment, the Budget allocation ... More

Higher spending on schools
For Bharat Nirman, as against Rs 18,696 crore (including the NER component) in 2006-07, I propose to provide Rs 24,603 crore in 2007-08, which marks an increase of 31.6 per cent. The education and health sectors will also receive substantial ... More

More for drinking water, sanitation
About 55,512 habitations and 34,000 schools have been provided drinking water supply till December 2006 under the Rajiv Gandhi Drinking Water Mission. More ambitious targets have been set for 2007-08 to deal with both non-coverage and slippage. I ... More

Cheaper edible oils
In order to make edible oils more affordable, I propose to exempt crude as well as refined edible oils from the additional CV duty of 4 per cent. I also propose to reduce the duty on sunflower oil, both crude and refined, by 15 percentage points. ... More

Lower cess on pet foods
I have good news for cat and dog lovers. I propose to reduce the duty on pet foods from 30 per cent to 20 per cent. I propose to reduce the duty on watch dials and movements as well as umbrella parts from 12.5 per cent to 5 per cent. In order to ... More

Pvt aircraft import to be costlier
Import of aircraft, including helicopters, by the Government and scheduled airlines is, at present, exempt from all duties, and that position will continue. However, there is no reason to allow the exemption to other private importers. Hence, I ... More

`Support for dairy industry insignificant'
The support announced to the dairy industry in the Budget is insignificant, according to Mr R.G. Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd. Mr Chandramogan, who heads the largest private ... More

Amendments to Budget
"We will move amendments to the Budget. We want correctives to be carried out by the government. (It is) a victim of fiscal fundamentalism. There are some references to the Left wish-list here and there, but these are not matched by adequate ... More

Increase in Defence expenditure
Companies supplying equipment to the Defence department are likely to benefit from the increased allocation of the defence expenditure up to Rs 96,000 crore. Some of the front-line companies, such as Bharat Electricals, Bharat Earth Movers and ... More

Dredging up gains
Dredgers have been fully exempt from import duty. Dredging Corporation, which presently remains the single largest player, will be a key beneficiary apart from players such as Larsen & Toubro foraying into this ... More

`A good opportunity lost'
I found the Budget proposals this year disappointing and insipid. The positives are the emphasis sought to be put on agricultural and rural development as well as education, which will certainly give a long-term boost to the growth of the ... More

`Balance between growth, inflation'
The Finance Minister has struck a balance between achieving growth and controlling inflation. This is evident in steps such as increased allocations for rural and social sectors, cut in central sales tax and financing infrastructure through ... More

`Good but not outstanding'
The Budget has been good, but not outstanding. Good in the sense that it has maintained the direction for growth set earlier. There were concerns that the growth direction could have been derailed by inflation. But the opportunity for second ... More

`Focus on inclusive, balanced growth'
The Budget has focused on inclusive and balanced growth, controlling inflation and strengthening infrastructure. The emphasis on fiscal consolidation, agriculture and rural development, support to manufacturing and SME, and measures to strengthen ... More

KCCI lauds Budget outlook on wealth creation
Thrust on education to see creation of more jobs More

More funds for roadways in N-E region welcomed

`Disappointing on tax front'

"Many positives in the Budget"

CEMENT
Cement companies face price-based duty
Will have negative impact, says industry More

`Excise hike on cement will drive up cost for consumer'
Cement stocks took a beating on Budget day following the hike in excise announced by the Finance Minister, Mr P. Chidambaram, to control cement prices. Stocks of leading cement manufacturers closed significantly lower reflecting the sentiments ... More

No bag of cheer
The cement industry has got the rough end of the stick from the Finance Minister in the latest Budget. Cement manufacturers will have to bear the brunt of a hike in excise duty proposed from Rs 400 to Rs 600 per tonne for cement sold at a retail ... More

Differential excise duty on cement
There will be no change in the general CENVAT rate or in the service tax rate. On February 15, 2007, the Government reduced the price of petrol and diesel by Rs 2 per litre and Re 1 per litre, respectively. I ... More

ECONOMY
No extra burden on corporates: Chidambaram
`Growth story is intact, I expect economy to grow at 9%' More

Inflation will be kept in check
"Well, the budget certainly is anti-inflationary. The fact that the fiscal consolidation programme is on target — the fiscal reduction and the revenue deficit reduction — we are moving in the set direction. That itself should be an ... More

ENVIRONMENT
Climate change on India's radar now
Expert panel to identify measures to be taken in future More

EXCISE AND CUSTOMS
Further cut in peak rates
In January 2007, the Government announced wide ranging reductions in tariffs. Import duties on capital goods, project imports, metals and specified inorganic chemicals were reduced by 2.5 percentage points and, in some cases, by 5 percentage ... More

Export duty on iron ore lauded
The introduction of export duty on iron ore and chrome ore is a very welcome move and is directed towards conserving the scarce resources of the country for its long-term benefit. Though, restricting exports volume could also have been ... More

FERTILISERS
Fertiliser prices, subsidy allocation unchanged
Going by the allocations, farmers may pay more More

`Give subsidy direct to farmers'
The Finance Minister, Mr P. Chidambaram, has called for working out an alternative method of delivering fertiliser subsidy directly to the farmer, against the present system of reimbursing producers. "The fertiliser industry has agreed to work ... More

Fertiliser - positive spin
The proposal to review the subsidy mechanism for fertilisers and to examine the possibility of direct subsidies to farmers will have sweeping positive implications for fertiliser producers over the long term, as it could endow them with greater ... More

HEALTH
Apollo CEO hails Budget
The stress on communicable diseases like HIV, Tuberculosis and Malaria is a welcome move. It will help in reducing the disease burden in the lower socio-economic groups, according to Dr K. Hari Prasad, Chief Executive Officer, ... More

Health insurance sector receives a boost
The health insurance sector has received a boost from the Union Budget. The tax deduction limit with respect to medical insurance premium under Section 80 D has now been increased from Rs 10,000 to Rs 15,000 and for senior citizens it has been ... More

HOTELS
Well-timed, for hotels
The five-year tax- holiday for two-, three- and four-star hotels set up in the Delhi and National Capital Region between 2007 and 2010 is well-timed. The industry was predicting a shortfall of one-lakh rooms in the region during the Commonwealth ... More

INFRASTRUCTURE
Road construction sector welcomes the Budget
Chidambaram proposes to hike allocation for developing highways More

At a steady pace
Investors who were looking for a huge increase in budget allocation for the infrastructure sector would have been disappointed. The Budget nevertheless appears to focus on an infrastructure-led growth. As the Finance Minister stated, Bharat ... More

Infrastructure cos buoyed by Budget
More

PHARMACEUTICALS
A non-event: Satish Reddy
From a pharmaceutical industry perspective, the Budget has again turned out to largely be a non-event, according to Mr Satish Reddy, Managing Director and COO of Dr Reddy's Laboratories, here. There is no doubt that the extension of weighted ... More

Sweet pill for pharma
The overall increase in the allocation of funds towards healthcare, anti-AIDs program and immunisation programmes is likely to benefit companies such as Panacea Biotech and Cipla. The Budget also bodes well for research-based pharma companies ... More

POWER
Power projects: Focus on faster implementation
Focus on ultra mega projects, merchant stations More

STEEL
Steel industry welcomes export duty on iron ore
Iron ore exporters cry foul More

Import duty on seconds, defective steel cut
Industry hails export duty on iron ore More

Duty cut on steel seconds
The duty on prime steel is 5 per cent. Seconds and defectives augment supply. Keeping in mind the need for a differential, I propose to reduce the duty on seconds and defectives of steel from 20 per cent to 10 per cent. I propose to fully exempt ... More

TAXATION
A menu with little spice
The stock markets crashed, the individual taxpayer remained unhappy and the corporate sector felt left out. That, in a nutshell, is the story at the end of the day that saw the Finance Minister, Mr P. Chidambaram, present the 2007-08 Budget, the ... More

Panel on VAT to chart out GST roadmap
The Finance Minister, Mr P. Chidambaram, on Wednesday announced that the Empowered Committee of State Finance Ministers on VAT would work with the Centre to prepare a roadmap for introduction of national level goods and services tax (GST) from ... More

Direct taxes account for 50% share of Central revenues
In 1990-91, less than a fifth of gross tax revenues came from direct taxes More

The `direct' impact
The Income-Tax Department boasts of having nearly three crore individual taxpayers on file. The raising of tax exemption limit by Rs 10,000 across-the-board for all non-corporate taxpayers will bring down the number of taxpayers on file. ... More

After 15 minutes or so to agriculture...
Kural 1036 it was that we heard this time from the Finance Minister: "Uzhavinar kai madangin illai vizhaivathoom vittame enbarkum nilai." Meaning, "If ploughmen keep their hands folded even sages claiming renunciation cannot find ... More

`Source rule' reaffirmed
The Finance Bill, 2007 proposes to insert an explanation in Section 9 to provide that where income is deemed to accrue or arise in India under clauses (v) [interest], (vi) [royalty] and (vii) [fees for technical services] of Section 9(1), such ... More

On the reform path
The overarching theme of Budget 2007 is substantial long-term investment in agriculture, infrastructure and education, and reining in inflation by easing supply-side constraints through duty reductions. The Government has demonstrated its ... More

Aspirations grounded
The tax proposals in the 2007 Budget is a continuing saga of tinkering that started in 2004, and in spirit and substance run contrary to the professed objective of keeping the tax system simple and the rates stable. While there are no new ... More

CST rate down
Value-added tax has proved to be an unqualified success. VAT revenues of the implementing States increased by 13.8 per cent in 2005-06 and by 24.3 per cent in the first nine months of 2006-07. The next logical ... More

`Education cess hike uncalled for'
The one per cent additional "education cess" on all taxes over and above the existing two per cent is uncalled for. So is the increase in the rate of dividend distribution tax by 2.5 per cent to 15 per cent. Large allocations are being made ... More

TEXTILES
Textile tech fund scheme extended
Customs duty on polyester fibre, yarn slashed More

Making the cut
The textile industry continues to be in the Finance Minister's favour, with the Budget proposals largely meeting industry expectations. The extension of the Technology Upgradation Fund Scheme, which allows an interest subsidy of 5 per cent on ... More

Textile industry: TUF scheme to continue
A rejuvenated textile industry is geared to meet the global challenge. Twenty six parks have been approved so far out of the 30 sanctioned under the Scheme for Integrated Textiles Parks (SITP). I propose to ... More

`Hi-tech weaving parks will benefit'
The higher budgetary allocation for the Technology Upgradation Fund Scheme (TUFS) and also an increase in the capital outlay for textile park projects will benefit hi-tech weaving parks being promoted in the country, said Mr M.S. ... More

Extension of tech fund scheme welcomed
Will help in balanced planning of new investment on capacity building and modernisation More

Textile industry happy with extension of TUFS
Absence of deep cuts in excise duties worrying More

Boost for man-made textiles
Last year, I reduced the excise duty on all man-made fibres and yarns from 16 per cent to 8 per cent. To further encourage this industry, I propose to reduce the customs duty on polyester fibres and yarns from 10 per cent to 7.5 per cent. ... More

TYRES
Finally, tyre industry gets some breather
The Union Budget 2007 offers a mixed bag to the domestic tyre industry. Despite lobbying, the Budget continued extending protection to the domestic natural rubber growers and belied tyre manufacturers' hope of a reduction in import duty on its ... More

PERSONAL PRODUCTS
Positive, but no bumper gains
There are no bumper gains for FMCG companies from Budget 2007, with status quo maintained on excise duty for most products. However, lower import duties on a range of chemical inputs could help alleviate input cost pressures. In addition, ... More

`Positive Budget for FMCG sector'
This Budget has brought the farm sector to the centre stage, not just via subsidies but by attempting to improve the productivity, said Mr Piyush Jindal, Senior Vice-President (Personal Care), VVF Ltd. "We view this as a big ... More

RADIO/TV
Bad news for media
There were no incentives in the Budget for the media sector. On the contrary, the withdrawal of customs duty exemptions/concessions on recorded magnetic tapes for producing TV serials and other equipment such as TV cameras, audio recording ... More

EDUCATION
No great marks
The education sector as a whole has got 34 per cent higher allocation in the Budget, getting Rs 32,352 crore, including around Rs 5,000 crore for women and child welfare. In effect elementary, secondary and higher education put together get Rs ... More

AUTOMOBILE COMPONENTS
`Nothing for battery industry'
The Chairman of Exide Industries Ltd, Mr S B Ganguly, battery industry has practically nothing to gain from the Union Budget 2007. On the other hand quick estimates suggest that the net tax outgo may increase marginally ... More

GEMS & JEWELLERY
Customs duty lowered for gem imports
The gem and jewellery industry, admittedly a growth and employment driver, can now import cut and polished diamonds as also rough synthetic stones at a lower rate of customs duty. On cut and polished diamonds, the duty has been pared down ... More

Polished diamonds to cost less
Another industry that is a growth- and employment- driver is gem and jewellery. I propose to bring down the duty on cut and polished diamonds from 5 per cent to 3 per cent; on rough synthetic stones from 12.5 per cent to 5 per cent; and on ... More

INDUSTRY ASSOCIATIONS
MAIT happy with stable duty regimen
PCs, printers, set-top boxes may cost more More

KNITWEAR & HOSIERY
Mixed reaction from Tirupur exporters' body
The Tirupur Exporters Association (TEA) has expressed happiness over the Union Budget's proposal for allocation of funds for industrial training institutes' revamp through private-public partnership and said this measure would pave way for the ... More

MINERALS
Duty on iron ore exports
The Hoda Committee has submitted a report on mineral policy. Taking a leaf out of the report, and in order to conserve our natural resources as well as to raise revenue, I propose to impose an export duty of Rs 300 per tonne on export of iron ... More

WATCHES & ACCESSORIES
Smuggling will come down: Titan
Reacting to the reduction in import duty on watch dials and movements from 12.5 per cent to 5 per cent, Mr Harish Bhat, COO of Watches Division, Titan Industries, and President of All India Federation of Horological Industries, ... More

NEWSPAPERS & PUBLISHING
Fillip to publishers
Stress on increasing the literacy level in the country through increased outlay for primary and secondary education and giving scholarships to children who have dropped out of school after class VIII would benefit companies that are in the ... More

HUMAN RESOURCES
Meet on HR practices
The School of Hotel Management and Catering Science, VLB Janakiammal College of Arts and Science, in association with Hospitality Educators and Recruiters' Association is organising a three-day national conference on `Changing trends in human ... More

INCOME TAX
Flattering to deceive
For the salaried, the second slab rate of 20 per cent should have started after Rs 1.6 lakh and the maximum marginal rate of 30 per cent after Rs 2.6 lakh. More

Income-tax: Marginal benefit
In the current year, there has been better tax compliance by individuals. I hope this trend will continue. The current slabs and rates of personal income tax (PIT) were introduced only two years ago. They ... More

Tax disadvantage after Rs 5.10 lakh
Budget 2007 provides for increase in basic exemption limit of Rs 10,000 for personal income tax. The basic limit for women assessees has been enhanced to Rs 1.45 lakh and for senior citizens the limit has been pegged up at Rs 1.95 lakh. For ... More