The Finance Minister has done a fine balancing act to control the deficit. The reduction in Corporate taxation is a welcome move. Also the reduction in customs duties on the machinery items will boost the industry production. The Finance Mionister focus on " Bharat Nirman " is commendable.

However the tax on withdrawal of Rs 10,000 and above from the Banks needs to be revisited. This will have a double taxation effect. Also the IT sector had expected the Finance Minister to come out with a scheme similar to the indian Capital Gains as reagrds receipt of money on sale of ADR's.

V G Gopalakrishnan, Chief Finance Officer, Colorplus Fashions Limited, Chennai

The Finance Minister has continued the reform process in the right direction.  The structural changes like rationalisation of individual tax rates, exemptions and reduction of corporate tax rate for domestic companies are all laudable measures.  The basic objective of increasing the tax net is a welcome step.  The other measures like reduction of peak level of customs duty, rationalising duty structure for petroleum products with out a corresponding change in the retail prices is a thoughtful measure.  Boost provided to textile industry in the form reduction in customs duties on imported machinery, as well as earmarking a separate cess on tobacco to fund primary health are some of the other timely schemes.  
 
The only disappointment is the fact that the excise duty on automobiles has been left unchanged.  This is an industry with more potential for growth and should have been given a kind of impetus to fuel further growth.
 
on the whole a budget which is a mix of measured populism, prudent reform consolidation and presents a pragmatic approach to fiscal consolidation and hopefully should usher in helping our economy outgrow the chinese economy.

Satish Reddy, Managing Director and COO, Dr. Reddy's Laboratories

There are a quite few positives in this years budget.The reduction of the customs duty and income tax,although expected, is a welcome move. The seriousness of the government in the implementation of VAT and simplification of tax issues are big positives. The policy initiatives announced for the infrastructure and the agricultural sectors will have a positive spiraling effect on the economy as a whole.

From the pharmaceutical industry point of view, it is an average budget. There are no definite proposals for the pharmaceutical industry. There has been a mention of creating a policy framework to encourage R&D. But we will have to wait and see if this intent really translates into definite action.

The only specific benefit is the extension of weighted deduction on R&D by two years from 2005 to 2007. The industry was looking forward to a more long-term time-frame extension, which would have encouraged companies to commit investments on the R&D front. We will have to wait and see the fine print if this extension also now covers not only in-house but also outsourced R&D expenses incurred in India and overseas.

There is also a mention of increasing the R&D corpus fund but we will have to wait and see the fine print to understand specific issues such as the time frame and the methodology for disbursement.

It is time the government recognized the potential of this industry to create a global impact. The least we can expect is the recognition of the pharmaceutical industry as a unique industry. This would probably get the industry the attention it deserves.

Ramalinga Raju, Chairman, Satyam Computers
 
The Finance Minister has yet again done a fine balancing act and delivered a growth oriented budget.

We are quite pleased with the Finance Minister’s focus on "Bharat Nirman" which stresses on development in the areas of irrigation, roads, water supply, rural electrification, housing and rural connectivity in the coming four years. The emphasis on "measuring the developmental outcomes rather than harping on the outlays" is a much needed step in the right direction to improve the delivery mechanism thus ensuring that the benefits reach the targeted segments.

The reduction in corporate income tax is a welcome move and was a much sought after demand of the corporate sector. The decrease in fiscal deficit is commendable and reflects the intention to adhere to financial discipline.

However, some initiatives that could have allowed for greater participation of the industry in the areas relating to corporate social responsibility would’ve been welcome.

The IT Sector
The continuation of policies in the IT sector coupled with the intention to give priority to employment generating sectors is a positive signal to the industry. Any support for providing education and training for potential entrants into the sector would further help in sustaining a competitive advantage for the industry.

The equity participation scheme for SMEs is encouraging and contributes to the overall growth of the IT sector.

S Thirumalai, Chartered Accountant

1. A definite and incentivised compensation system on VAT was necessary to provide the support to this important State level commodity taxation change process with effect from April 1, 2005. With only less than 30 days to implement the system this would have enhanced the chances of more States getting on to the “band wagon” given the ambivalent attitude expressed about the level of preparedness in the recent past .

2. On the Customs side while the changes in bringing down the rates to those of ASEAN levels was expected there have been some notable exceptions with respect to the chemicals industry.

3. The Countervailing duty on ITA bound products in lieu of Sales tax is the revisit of SAD that was in existence prior to Jan 7, 2004 and will again raise the demands from the States for an import VAT. This issue should have been addressed as was stated in the “White paper on VAT” after addressing the needs of the land locked States.

4. The rationalization of Small Scale industry benefit by increase in the eligible turnover will be negated with the removal of the differential duty benefits in case of units availing Cenvat. The bulk of the industrial ancillaries survive on the strength of this differential which appears to have been removed.

5. A separate Service tax legislation was a long expected need and perhaps this has to wait for some future occasion. The introduction of service tax on apartments by way of construction services is another retrograde step.

Mrs. Rama Devi, Former Governer
 
A Jarring note in an otherwise good music
 
The Finance Minister wanted the blessings from Senior citizens and women.  I belong to both the categories and I liberally bless him for the concessions announced for both these categories. The withdrawal of tax on Tea and Vanaspati is a welcome step for the middle class sections of society. Reduction Customs duties on machinery items and IT will boost industrial production. I an extremely pleased with the Finance Minister’s stress on skill based education. Our degree based education has failed to deliver the goods. We need to create a system of education where the educated are capable of being employed. He has also stressed on assistance to self help groups. These are highly idealistic and comparable to Gandhian philosophy. On the whole this is a human resource and welfare development budget and I whole heartedly congratulate the Finance Minister.
 
However there is a jarring note in the otherwise pleasant orchestra. The tax on withdrawal of Rs.10,000 from the bank. This is my money and I have already paid tax on that. I don’t understand the logic of taxing this again when I withdraw. This is a retrograde step and amounts to double-jeopardy. 

Dr. Jaya Prakash Narayan, former IAS officer, convenor, L:ok Satta and member National Advisory Committee
 
The Finance Minister had to present his considering the following six basic requirements.

1. Need for fiscal  consolidation and prudent resource management

2. Emphasis and allocation on social sector

3. Enhanced plan allocation

4. Enhanced devolution to states

5. Tax stability

6. Impetus to economic growth

7. Continuous implementation to economic growth

Considering the six objectives and given the compulsions under which he has to work,  on the whole,  a credible and positive effort.
 
A major concern  is delivery of services and implementation., for which the Finance Minister did not come with any tangible ideas.
 
Rs. 26,000 crores bonanza to states on the recommendations of the 12th Finance Commission should have been linked to local government empowerment and transfer of the resources directly to them.
 
We require aggressive pursuit of economic liberalization policies which worked so well in the last 10 years. Unfortunately the political compulsions have tied up the Finance Minister’s hands.

However considering the above factors, he has to be congratulated for a creditworthy performance.

Radhika Shastry, General Manager- India Operations, RCI India
 
Tourism is set to witness a leap in the next few years with the new provisions on infrastructure development, development of highways, exemptions to Indian Airlines and Air India. The lending of Rs. 10000 crores to specific tourism projects will allow for several developers in the hospitality industry to leverage India's emerging strengths on the global tourism circuit. Overall - a development oriented budget for the industry