Mumbai, March 16
The stock markets fell as investors found the FY20013 budget proposals announced on Friday as tax mopping and inflationary, with the Bombay Stock Exchange benchmark Sensex falling 210 points to 17,466.20, despite firmness in global equities. Refinery, power, capital goods, banking, PSUs and metals stock faced intense selling pressure.

Finance Minister Pranab Mukherjee in the Budget 2012-13 increased service tax and excise duty to 12% from 10%, which will make cars, fridges, 2-wheelers, ACs and washing machines costly. Besides, a higher fiscal deficit of 5.9% for the current fiscal overshadowed several positives, including lower income tax and strong indications of more economic reforms.

The BSE 30-scrip Sensex was highly volatile and moved between 17,871.00 and 17,426.58. It closed 209.65 points or 1.19% down at 17,466.20. The 50-scrip NSE index Nifty plunged 62.60 points or 1.16% to 5,317.90.

"After moving up at the start of the budget, the market saw selling pressure on the announcement of increase in service tax and excise duty. Both these levies would make goods and services costlier and keep up the inflationary pressures," said Milan Bavishi of Inventure Growth & Securities.

The hike in the cess created a negative impact on the oil explorers with ONGC, Cairn and RIL falling in the range of 3-6%, he said.

Akshay Gupta, MD & CEO of Peerless Mutual Fund, said: "The budget trajectory is headed in the right direction. Despite baby steps, the fiscal consolidation exercise is positive for the country's finances." — PTI

New Delhi, March 16
Automobile companies heaved a sigh of relief and expressed general optimism over the budget as Finance Minister Pranab Mukherjee did not hike taxes on diesel cars which would as a major boost for all the automobile makers.

Even though the car prices were set to rise with the Mukherjee announcing an increase in excise duty, automobile makers said that under the current difficult economic environment, the finance minister has tried to balance the need for growth with fiscal compulsions.

Carmakers had feared a tax on diesel vehicles or a reduction in the fuel's generous subsidy, which has boosted sales as overall demand slows on high interest rates and rising petrol prices in the country.

Sale of diesel car sales have accelerated and now account for about 80 per cent of new purchases, compared with less than 20 per cent a few years ago. The diesel model of Maruti Suzuki's popular new Swift hatchback has a waiting list longer than six months.

Incidentally, a rush to buy vehicles before the budget drove car sales in February to their highest-ever total.

S Sandilya, President, SIAM while welcoming the budget said, “while the auto industry appreciates that there was a compulsion to increase base rates of service tax and excise duty, the industry had hoped that the excise duty on large cars would have come down from 22 per cent to 16 per cent rather than going up.

New Delhi, March 16
The budget received a mixed reaction from industry. While some analysts and industry leaders have called it balanced, others have said the finance minister played it safe amid political pressure.

Confederation of Indian Industry (CII) president B Muthuraman said the budget had many growth oriented measures and has also made efforts towards fiscal consolidation. In particular, the timely focus on the infrastructure sector is welcome. An area of concern for industry is the increase in excise duty and service tax from 10% to 12%. At a time when industry is already facing huge increases in input cost, this will further add to the burden.

FICCI had expected and recommended the budget should include measures for promoting investment led growth. This was specially requested in the context of ongoing slowdown of economic growth which could be lower than 6.9% in 2011-12. The nominal growth rate of GDP is expected to be 14% for 2012-13. This translates into a 6.5% inflation rate, assuming a 7.6% GDP projection in the next fiscal. It is not clear if the higher growth rate would see a strong revival of the manufacturing sector.

Assocham president Rajkumar Dhoot said the budget for 2012-13 is well-balanced and pro-active with well-defined measure to bring back the economy on higher growth track. Despite current economic situation coupled with domestic political compulsions and challenges like elevated inflation, the government has tried to tread the path of fiscal consolidation with prudent macro management.

Joseph Massey, MD & CEO of MCX-SX, said the budget had several proposals to develop Indian capital markets and enhance retail participation such as introducing Rajiv Gandhi Equity Saving Scheme, reducing STT and introduction of electronic platform for the IPO subscription process.

Shantanu Prakash, CMD of Educomp Solutions Ltd, said: “There are two key policy directives in the budget that auger well for the education sector. The allocation for PPP, particularly in the core education is both an impetus and an acknowledgment of the importance of the private sector in education infrastructure. The Credit Guarantee Fund for education loans will particularly benefit aspirants with low financial security to access loans at the lowest end of the skill development market. Service tax exemption for school education while along expected lines is a decidedly welcome step also.

Amit Gupta, MD of Orris Infrastructure, said the budget did not provide the, hoped for, necessary impetus for the real estate sector. While the emphasis was on Infrastructure development, the introduction of tax deducted at source on sale of immovable properties, enhancement of service tax to 12% and no enhancement of tax breaks for the home buyer are negatives for the sector. Permitting external commercial borrowings for affordable housing is the only welcome move.

N. Chandrasekaran, CEO & MD of Tata Consultancy Services, said: "Given the economic and political circumstances, the finance minister has presented a pragmatic budget with doses of good intentions for long-term growth but lacked short term punch to get growth going. For the IT industry, the request to exempt SEZ income from MAT has not been granted and this is disappointing.

Rajiv Deep Bajaj, vice chairman & MD of Bajaj Capital, said: “Steps such as doubling the limit of tax free infrastructure bond issuances to Rs. 60,000 crore, providing tax relief on direct equity investments of up to Rs 50,000 by new investors under the Equity Savings Scheme, reduction in transaction tax by 20%, hike in import duty on gold bars and coins – are all in the direction of promoting higher flow of household savings into financial products and capital market. Household financial savings had in fiscal 2010-11 fallen to multiyear lows”.

Bangalore, March 16
NASSCOM, the leading advocacy body of the Indian IT and BPO industry, today expressed its disappointment about the union budget proposals presented by the Finance Minister in the parliament today.

NASSCOM described the proposal as “lost opportunity for the economy”.

Listing their disappointments, NASSCOM said SEZ policy was introduced in 2005 and MAT introduced in 2011 adversely impacted the viability of investments already made. But MAT has not been removed.

It added that transfer pricing litigation and lack of clarity has been a major burden for the IT-BPO sector.

“The finance minister has announced introduction of the Advance Pricing Agreement (APA) from 2012. However, APA is a long drawn out process and it is not clear how the current issues will be resolved. Moreover, transfer pricing regulations have now been introduced for domestic transactions, further increasing the complexity”, it said in a statement.

While welcoming announcement by the government of US $1 billion venture capital fund for MSME across the country, NASSCOM said it was “far too little”.

NASSCOM had recommended the need for reduction of TDS for SMEs and introduction of non-profit linked incentives but none of these found mention in the budget proposals.

According to NASSCOM, the proposed increase in service tax and excise duty will increase cost of doing business in the country. “There have been some announcements on simplification of service tax refunds, removal of dual levy of service tax and VAT – the processes still need to be elaborated”, it said.

It also pointed out that several provisions related to withholding tax, international cross border transactions and GAAR had been introduced in the Finance Bill. These would add further complexity, NASSCOM said and added, “it is particularly unfortunate that some of them will apply retrospectively”.

NASSCOM alleged that increased provisions and obligations on the corporate tax payers have been imposed. These were subject to multiple interpretations and would lead to substantial increase the discretionary power of tax authorities, it said.

NASSCOM would be submitting a detailed post-budget memorandum on these issues and would seek the government’s intervention and support to build a conducive policy environment. “The vision must be to make India a country easy to do business with and in”, NASSCOM said.

“The budget is disappointing on various counts – there is no focus on putting the economy on a high growth trajectory, fiscal deficit reduction is through higher taxation, rather than expenditure management”, the NASSCOM statement said.

It, however, welcome the announcements on IT being leveraged to create an effective implementation platform for government delivery of programs and direct transfer of subsidies leveraging Aadhaar.

Chandigarh, March 16
Various industrial organizations and chambers of industry in region have given a thumbs up to the budget proposals for 2012-13 by calling it a realistic budget. However, the increase in the excise duty and the service tax rate has been criticized by one and all.

Vijay Thandani, chairman of CII northern region, said that the budget is realistic. “Given the global economic and political situation, and the domestic macroeconomic environment, the budget has attempted to balance the need for growth and macroeconomic stability. There is focus on infrastructure, reiteration of the government’s intent on taking forward the reforms including tax reforms, and also the intent to tackle black money and corruption,” he said.

Maneet Singh, treasurer of the Chandigarh and Punjab chapter of The Indus Entrepreneurs, however felt that this is not a friendly budget for the industry. “There is no relief ad taxes have gone up. It is less of a people’s budget,” he said.

The budget is in line with the industry expectations and no major breakthrough has been noted. However, the move to enhance excise duty and service tax is disappointing. The move to raise the standard rate of excise duty from 10-12%, especially in wake of the present slowdown in industry segment, would escalate the cost of production and stoke inflation.