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BW Businessworld

'Very Few Steps To Encourage Growth'

Photo Credit :

Ravi Uppal, MD & CEO, Jindal Steel and Power Limited
The Union Budget 2013-14 is along predictable lines and is in sync with the government’s mantra to achieve growth leading to inclusive and sustainable development. Given today’s scenario, it is a fairly realistic Budget combining populism and economic prudence. It has ensured status quo and gives a message of stability and continuity.

It rightly targets the urban and rural poor and the downtrodden sections of the society as they need our attention and their requirements must be addressed. The budget also benefits the banking and insurance sector. Along with his earlier announcement of giving more licenses to banks, the finance minister has given a big push to banking activity. It’s clear that the finance minister wants the banks to reach out to people in small towns and rural India.

For the manufacturing sector, while some announcements have been made that are positive, there is nothing radical to provide the much needed stimulus. Very few measures have been incorporated in the Budget to encourage the growth of the manufacturing sector as well as stimulate demand for capital/durable goods. A drop in interest rates would have gone a long way to stimulate the demand of goods from the manufacturing sector.

The one year extension to the tax holiday for power plants is a big relief and will give the much needed respite to the power sector. The extension of the investment allowance by 15 per cent is an encouragement for the manufacturing sector and will benefit companies like JSPL who are planning to set up projects within the specified period.

Measures announced to increase infrastructure spending and the various industrial corridors will serve to stimulate the demand for capital goods. The sops for housing loans as well as increase in allocation for low-cost housing will also benefit JSPL as we are on the threshold of coming out with environment-friendly and low-budget construction materials/solutions.

The Finance Minister’s offer to set up a PPP between Coal India and private players is a welcome development, though the benefits of it will accrue after three to four years. It will stimulate production of domestic coal and reduce dependence on Coal India as well as imported coal.

However, no change in the interest rate regime, increase in corporate tax and no divestment of public sector units is a disappointment. These measures could have been a big stimulus for the economy.