The Union Budget for 2012-13, presented by the Finance Minister, Mr Pranab Mukherjee, last week, has nothing either for the poor of the country or Indian companies, speakers at a Business Line Club-organised Budget analysis, said today.
Budget Talk '12, presented by Central Bank of India, saw over 400 students from various city B-schools who are part of the BL Club, attend the event.
Mr Manikam Ramaswami, Chairman and Managing Director, Loyal Textiles, observed that the increase in indirect taxes (mainly, the 2 percentage point increase in excise duty) would hurt the poor, but the Budget has nothing to counter-balance this for them.
Fuel subsidy
Mr Ramaswami said that while there have been some efforts towards bringing down input costs for the industry, such as allowing external borrowings and abolishing duty on coal, there has been no push towards making industry pass on the lower costs to the consumer.
He said that the fuel subsidy was actually hurting the poor. He said that of the four modes of transport — air, road, rail and ship — the least efficient was air, but the government is spending huge sums in keeping airlines such as Air India afloat. Road transport is the second least efficient, but again huge amounts are spent on road development. On the other hand, rail transport is far more efficient than road, but rail fares are being raised. Shipping, the most efficient means of moving goods , is practically neglected. Mr Ramaswami said transporting a container from Delhi to Chennai by road would cost approximately Rs 1 lakh, but Rs 25,000 by rail.
If the government rolled back the recent rail fares, it would only lose Rs 4,500 crore — as much amount as was being spent on keeping Air India from going belly-up.
Using technology
Mr Ramaswami, however, lauded the Budget for its efforts towards using technology to make payment of food and fertiliser subsidy to the users directly and called upon the student community to involve itself in this process.
He said that the NREG scheme, (which provides work to the rural workforce for 100 days a year) had achieved something that had been attempted and not achieved in the previous three decades – enabling a minimum wage to be effective.
He said that the government spent only about Rs 20,000 crore on the scheme, but it had an effect of putting about Rs 250,000 crore in the hands of the rural populace, enhancing their purchasing power.
Speaking on the subject of taxation, Mr Rajesh Srinivasan, Senior Director, Deloitte, said that by bringing under the tax net such overseas transactions by a company as would have increase the profits on the company's Indian arm, the government sent a clear signal to foreign investors: be prepared to pay taxes here, even if an Indian law was amenable to alternative interpretation.
Ms Aarati Krishnan, Head of Research, Business Line , noted that with persistent high inflation and interest rates (and now) higher taxes, the aggregate demand for goods and services would come down. Therefore, this is not a good budget for India Inc., she said.
The Budget Talk was moderated by Mr D. Sampathkumar, Editor, Business Line. The Talk was followed by a lively question and answer session with the students firing away questions on various aspects of the Budget to the panellists.
The event partners were soft-drink maker Fruitnik, Adyar Ananda Bhavan and Repute packaged drinking water.