Executives Dismiss Budget as Lacklustre

DUBAI - Indian business leaders in the UAE dismised the 2009-10 budget as lackluster, complaining that it offered no relief from corporate taxes and signalled a troubling growth in the fiscal deficit.



By Mehre Alam And Jeejo Augustine

Published: Wed 8 Jul 2009, 1:50 AM

Last updated: Thu 2 Apr 2015, 4:42 AM

Dozens of businessmen at a Dubai hotel watched a live telecast of Finance Minister Pranab Mukherjee delivering the budget to India’s Parliament on Monday. Most of them said they drew no excitement from what they heard, speaking afterward in a discussion session hosted by the Indian Business and Professional Council, or IBPC, Dubai.

Many expressed a view that the budget should have offered greater concessions for exporters in light of the global downturn. There was almost unanimous concern over the relatively high fiscal deficit, which stands at 6.8 per cent.

And they grumbled that the budget left India’s corporate tax rate unchanged. Still, they noted that the budgetary proposals were more or less as expected, given that this was the first budget of a newly elected government.

“People had great hopes from this budget. They were expecting a bigger increase in the ceiling on income tax. What the finance minister did was only cosmetic,” said Prashant K. Gulati, Secretary-General of the IBPC, Dubai.

“However, companies can heave a sigh of relief with the removal of the Fringe Benefits Tax. It’s a positive move considering the huge costs of compliance documentation firms are currently facing.”

Gulati said that the budget reflected a kind of balancing act in the face of the opposing realities of a need for more governmental spending and an escalating fiscal deficit.

Industry, business and markets expected bolder measures from the UPA government, said B.R. Shetty, Managing Director & Chief Executive Officer of the NMC Group and UAE Exchange. “There is no big-picture vision in the budget. The fiscal deficit is huge, and no major announcement was made to address the issue. The budget indicates no structural changes that speak of a long-term vision,” Shetty said.

“The finance minister totally bypassed the issue of divestment. He also surprised the markets by keeping quiet on Foreign Direct Investment.”

The budget failed to address any of the long-term issues of the Gulf-based NRIs, such as rehabilitation of Gulf returnees or specific schemes to attract their investment into India, said Yusuffali MA, Managing Director of EMKE Group and Board Member of Abu Dhabi Chamber of Commerce & Industry. “I hope that the government will work out some special package in this regard soon,” MA said.

Dr Ram Buxani, Group President of ITL Cosmos-Group, argued that while there was nothing for Overseas Indians in the budget—“not even a mention of appreciation” — Mukherjee had gotten away with “meagre concessions” in direct taxes.

“The budget would have been a better one if the finance minister had taken some initiatives to introduce social security measures like in other developed nations,” he said. “The Indian budget can rightly be judged from the way the stock markets in the country have crashed.” Navin Kapoor, MD of Xpertize United, Dubai, and a Board Member of IBPC, Dubai, said that Gulf businessmen in the gold and silver trade would not welcome the increased custom duty on these metals. He, too, bemoaned the budget’s lack of mention of NRIs, calling it disappointing.

Anand Chandwani of Indogulf Intertrade LLC was slightly more forgiving. “This is the best budget we can have in these turbulent times,” he said.

Kiran H. Sangani, Honorary Treasurer and Member of the Administrative Board of the IBPC, Dubai, seemed to agree. He called the budget “simple’” and “stable” and said that foreign investors would gain from its provisions.

Indian Consul-General Venu Rajamony lauded the document for its focus on “inclusive growth” and for its stated objective of 9 per cent growth.

The budget has promised to halve poverty in the country by 2014 and add 12 million jobs each year. “If a trillion-dollar economy can achieve a 9 per cent growth, we are going to see huge opportunities for companies in the UAE and in this region,” Rajamony said. He added that the budget’s focus on infrastructure and public-private partnerships was especially good news for UAE firms, some of which are already engaged in infrastructure projects in India.

“The policy outline opens the door for heightened economic interaction between the UAE and India,” Rajamony said. “UAE companies are known for creating world class infrastructure.”

V.P. Nagarajan, Chairman of The Institute of Chartered Accountants of India, Dubai Chapter, pointed out that while the finance minister laid down a laudable objective of reducing poverty, he did not specify the steps necessary to achieve this goal.

alam@khaleejtimes.com

jeejo@khaleejtimes.com


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