Special Report

Budget 2011: Industry Reactions

March 2011
The reduction on basic customs duty on pet coke and gypsum by 2.5 per cent and replacement of excise duty by ad valorem duty on cement are expected to have a negligible impact on the pricing of cement and overall construction costs. There will be no impact of this on flooring companies at all. -Gaurav Saraf, Director, Squarefoot

The move to increase the priority housing loan limit to Rs 25 lakh was a positive one that will lead to increasing the base of home loan takers and thereby boost affordable housing. It is disappointing that the real-estate sector was not given industry status. If that happened, bank financing would have been easier for real-estate companies. Affordable housing should have got some fiscal incentives. The proposal to increase rural housing funds to Rs 3,000 crore from Rs 2,000 crore will lead to development in rural areas. - Jitendra Jain, Managing Director & CEO, Neev Group of Companies

I believe this is a balanced, considered budget from the Finance Minister. The strong focus on fiscal discipline and financial programmes will be instrumental in increasing liquidity, and this along with increased FIIs investment will widen the participation of foreign investors in the Indian market. The continued focus on infrastructure and lowering inflation will also play a great role in drawing in investment, particularly with the promised creation of SPVs as infrastructure debt funds. The MAT on SEZs may discourage fresh investment in export related activities; however, the positives far outweigh the negatives. -Robin Banerjee, CFO, Suzlon Energy

The Budget did very less to give impetus to 'Homes for All', which has been recognised as the need of the hour by everyone including the Finance Minister himself. Taxation worries for the real-estate sector still remain as the industry demands a significant reduction in stamp duties on transactions. The concerns of the industry, particularly on the interplay of GST and local levies, are still not addressed. So it remains a status quo. - Boman Irani, Chairman and Managing Director, Rustomjee Group

The real-estate sector would have been more content to have got the government's notice of the huge gap in demand and supply of the mid-market housing segment. Meeting more urgent requirements towards removing archaic laws and bringing taxation to a reasonable level would have further brought good news for both the industry and the large mid-market segment of the country. -Brotin Banerjee, CEO & Managing Director, Tata Housing Development Company

The Minister has not left out the logistics sector, the backbone of the economy, and has set aside Rs 2,000 crore for warehousing, mainly in the area of agriculture. We are hoping that GST will be implemented soon, which will replace the cascading effect created by existing indirect taxes. However, the Government should have considered giving the logistics sector infrastructure status as a whole. -Vineet Agarwal, Executive Director, Transport Corporation of India (TCI)

The proposals with regard to infrastructure are quite pro-sector. The allowance of a tax-free bond of Rs 30,000 crore to be used by various government undertakings in 2011-2012 to give a boost to infrastructure development in railways, ports, housing and highways development is a welcome move. Investment-linked weighted deduction, primary lending enhancement from Rs 15 lakh to Rs 25 lakh, liberalisation of interest subvention of 1 per cent and creation of mortgage risk guarantee fund to enhance credit worthiness of EWS and LIG households will together contribute to a surge in demand for affordable housing. - GRK Reddy, Chairman & Managing Director, MARG Group

Decrease in cost of steel would mean that the cost push inflation of bigger projects, both realty and infra, would be under control. In fact, this step can give a boost to overall demand, especially in the realty sector. Probably this budget is the best that the Finance Minister could do, given the current scenario. In short, it's a 'no-frill, no-thrill' Budget. - Abhijit Roy, COO, Berger Paints