There is nothing so important in a Budget that after being tabled in Parliament, money will start pouring in the economy. The NDA government has been successful in giving a consistent direction in the past nine months. Every step of the government has been in that direction and the Budget doesn’t deviate from it either.
With the pre-approved guidelines, setting up of large projects will become easy, as investors don’t have to wait for a couple of years to get approvals for projects. This will make it more attractive for companies to invest in India. The reduction in royalty tax, which will help companies import technology from their foreign partners, will help establish India as a preferred investment destination. Deferment of GAAR by a couple of years will also help in this respect.
Coming to the automobile sector, allocation of funds for electric vehicles was eagerly anticipated as for the past two years we were disappointed with the lack of initiative from the government. We are elated to see that some effort has been taken in this connection, but it may be too little. We are waiting for the government to offer some incentives for buyers looking to purchase electric cars.
The FM may have cut the corporate tax rate to 25% from 30%, but one has to read between the lines in order to understand what he said. There will be no reduction in corporate tax in this fiscal and, as a result of the 2% surcharge, corporates will end up paying more in this fiscal.
As far as extra funds allocated to the Mahatma Gandhi National Rural Employment Guarantee Scheme and infrastructure development is concerned, I don’t think that will have an immediate impact on vehicle sales. We would like to see Indian agriculture getting mechanised over the long term to mitigate challenges of increased labour cost, which in turn should help tractor sales.
By Pawan Goenka, Executive Director & President, Mahindra & Mahindra
