Balasubramaniam, CEO, Birla Sun Life Asset Management Company

Budget expectations are building up among all of us. However, it is also going to be a toughbudget in terms of achieving a fine balance between growth and fiscal. Many challenges havebeen posed to the Government affecting the overall performance on economic activities due towhich the expectations in the market place is also low.
Some of the obvious changes expected this time could be the reversal of fiscal stimulus thatwas given during the 2009 budget in the form of excise reduction. However, this reversal ofexcise duty needs to also get aligned to the GST proposed tax regime. There are lots of cessattached to corporate tax, we believe, these may be reduced so as to reduce the corporatetax rate as well as to prepare the tax structure to GST proposed regime. Given the high foodinflation, there is a likelihood of food security tax and subsidy to be close to Rs 80,000 crores.
The other social welfare programme of the current Government such as NREGA will continueto be the focus as the programme has been a major success benefitting large pool of publicat the rural market. We believe this expenditure continued to be tagged at about Rs.40,000crores. In the recent past, there has been pressure on Oil prices thus posing threat for Oilsubsidy as well as fertilizer subsidy going up. The amount towards this could be in the range ofRs.26,000 and Rs.80000 crores towards fuel subsidy and fertiliser subsidy.
Non tax revenue for the current year has been one of the best ever in the history of India Incthrough sale of 3G License as well as select PSU disinvestment. We believe this will continueand there is likelihood of generating Rs.40,000 crore from PSU divestment though it is not atthe same order as this year.
However, Budget may attempt to increase non-tax revenue through changing tenderingprocess in sectors like Power, Road and other such infrastructure projects. Given the constraintto the Government in overstating the revenue target in the coming fiscal, we believe overallfiscal deficit would be maintained at around 4.80% translating to a total borrowing estimate ofroughly Rs.4,30,000 crores at gross level.
There has been a need to create a vibrant corporate bond market; however this needs a changein taxation structure for overseas investors. Given the current need to fund infrastructureprojects, we believe Government would favorably alter the TDS on interest payment to attractglobal flows into Indian Bond market. As it is FDI and FOREX flows are the key for the comingyear given the current account deficit. Therefore, in our view, the Budget will bring in focus asto how to get funds to fund the massive need of infrastructure sector either through openingbond market or through introduction of amnesty scheme. As stated in the recent monetarypolicy, Budget will bring focus in monitoring expenditure towards productive asset creationthus increasing the capital formation in the system in building capacities.

Samir Bimal, Country Head, ING Private Banking India

The Union Budget for 2011-12 would be prepared on the back of challenging macro economic environment such as high inflation, interest rates, high current account deficit, IIP coming down etc., besides State elections during May-June. The next financial year would also be the last year of the 11th Five Year Plan. The high fiscal deficit would restrict effective management of inflation by monetary policy. The supply side inflationary pressures may be addressed by committing more resources to capital expenditure. The food inflation is a serious concern and the Prime Minister said a lasting solution to tackling high food inflation lay in improving farm productivity. Hence more budgetary push for increasing productivity is expected viz. agriculture research, tax benefit on agricultural tools and other mechanization equipment etc. In view of the above, the finance minister is expected to present a more balanced budget with a priority to keep fiscal deficit under control while facilitating inclusive growth.

Minakshi Batra, Director India, IDA Ireland

“Over the last two years, the government has introduced a host of economy-boosting policies such asthe ‘Ten point economic stimulus package’ as well as RBI’s interest rate-cum-monetary policy to cushionthe impact of the global financial crisis. While these initiatives have helped the country accelerate itsgrowth levels, our aspirations of crossing the double digit growth threshold still remains unfulfilled.
At a macro level, controlling fiscal deficit is a direct function of controlling inflation, which can beachieved through reduction in import duties and integration with the global marketplace. The risinginflation is a reflection of the sorry state of affairs with regards to food related infrastructure andstorage in India. While road infrastructure has been given its due focus and attention, the governmentneeds to consider the potentially accruable benefits by infusing technological advancements in itsinfrastructural framework of the agriculture and food industry. Another closely linked issue here is thatof rising fuel prices. While petrol prices were deregulated in the pursuit of controlling fiscal deficit, thegovernment should now consider freeing up diesel prices as well.
In terms of budget expectations from specific sectors, I would like to highlight BFS and Pharmaceuticalsverticals which are unarguably amongst the growth drivers of the country. While the IT-ITeS industryhas more or less stabilized on the back of sufficient SOPs over a period of time, the pharmaceuticalsector in India currently grows at 11-12%, which is lagging as compared to the global growth levels by5-6%. The government's Vision 2015 statement had indicated an 18%+ CAGR for the pharmaceuticalsector, translating to doubling of revenues to $40 billion over the next five years. Towards this end, theGovernment should try to ensure that critical drugs are available at affordable prices which could bedone by rationalizing duties and encouraging competition. In the Banking sector, a concerted efforttowards boosting ‘mobile banking’ would accelerate the growth of this industry. As the penetration oftelecom services grow at a rapid rate, such a system will bring more individuals into the banking fold.’’

Hari Kiran, MD, Sujana Energy.

India should create an M&A favourable environment
FM should facilitate Outward / International M&A activities to help
Indian companies increase their global foot print.
The Indian Union Budget for 2011 should focus on creating an outward/International M&A focused environment. This will not only ensure increase of Indian companies foot print to access more resources, better manufacturing skills but also to diversify the overall debt portfolio. As case point being China’s huge move towards international acquisitions in the areas of Energy, Natural Resources, etc.
However, to protect local manufacturing industry import & anti-dumping duties may be continued if not majorly increased.

Dilip Modi, President, ASSOCHAM and Managing Director, Spice Communications

“The guiding principle has to be sustainable growth with fiscal consolidation and good governance. Budgetary allocations must increase to address infrastructure gaps both in physical and social infrastructure, especially in connectivity and broadband. Incentives for investments in mobile value added services will leverage investments in digital highways. Further, right incentive structure to increase private sector participation in infrastructure will help unleash the entrepreneurial potential of India’s growing pool of talent, and help the economy grow much faster. Government should retain the stimulus to make the infrastructure sector attractive for the private sector participation as well FDI. Flip should be provided to health, education, technology research, rural development and livelihood support programmes. Budget should deliver an enabling environment to facilitate financial inclusion by allowing multiple business models including microfinance, more banking correspondents, mobile banking and other capitalized institutions to reach unbanked sector in remote areas. It is equally important to reduce subsidies and direct more funds by way of capital expenditure rather than consumption expenditure. Budget should also pave the way for increased manufacturing competitiveness with focus on SMEs.”

Hitesh Obeori, MD & CEO, Info Edge

As a young company in the young internet sector which caters to the basic aspirations of young people in this country (Jobs, Education, Housing) we want the FM to 1) Give special status to the Internet sector which can be as transformative for the economy in the next ten years as the telecom sector was in the last ten. It can help create hundreds of thousands of new jobs while at the same time help transform and make more efficient virtually every sector of the economy – Business, Governance, Commerce, Communication, Education and Entertainment. The government should extend some fiscal benefits to companies which operate in this space.2) The youth want high quality education and jobs. On the other hand companies continue to face a talent crunch. The FM should increase the allocation for higher and technical education especially in areas like Engineering, Management and Vocational Courses.3) Lastly the more immediate need is to ensure that we keep the wheels of the economy moving. The high rate of inflation we see today is because of a combination of high oil prices and domestic supply side constraints. High interest rates will hurt investment which will result in even more supply side issues going forward. We need to provide easy financing to companies at reasonable interest rates to ensure that infrastructure projects keep moving.

Mr. B G Jain – Chairman & MD, Nakoda Ltd.

For Polyester Filament Yarns segment, like everybody else, Nakoda too expects that this year’s budget will be conducive to maintain annual growth of more than 9% in the years to come.
So far as Polyester industry is concerned it is also growing at a CAGR of more than 10% for the past two decades. To a large extent, this growth is on account of shortage of cotton due to ever increasing demand of various fibres. Because of increase in Polyester Filament, there is an increase in per capita consumption of various textile products and other end-users like technical textiles. We feel that in order to sustain industrial growth in Polyester segment to the existing level of 10%, the duty on polyester products should be brought at par with cotton i.e. 4%. It may be mentioned that Excise Duty of Polyester Yarn was increased to 10% in the last budget. We expect that duty @ 4% would not only boost investment in polyester sector, but will also contain pressure on ever rising demand of cotton fibre.
For renewable energy, we apprehend that there is a proposal to discontinue tax holiday given to income from renewable energy u/s 80 IA of Income Tax. The Wind Power production is still not very viable for Independent Power Producers (IPPs). Withdrawal of any incentives would be counter productive to further investment in this sector. On the contrary there is need for providing more incentives to this industry.
It is also desirable that the manufacturers of Wind Turbines get exemption of Excise Duty on their raw-materials. Since Wind Turbines are exempted from Excise Duty, they do not get any MODVAT advantage. Abolishing of Excise Duty on their raw-materials would help in reduction of Wind Turbine prices which will eventually make Wind Power Projects more viable.