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Budget to be inflationary, says industry

As finance minister Pranab Mukherjee resorted to mopping up more taxes, a disappointed India Inc today said his Budget is a "missed opportunity" and would have cascading impact on inflation and consumer demand.

"It is not going to stimulate growth in the economy," Ficci President R V Kanoria said.

CII President B Muthuraman said he was expecting much more and the excise-related proposals would push up prices.

However, the steps to control fiscal deficit would augur well for the economy.

"The Budget is a missed opportunity," Siddharth Birla of C K Birla Group said.

Biocon CMD Kiran Majumdar Shaw expressed fears the Budget would be inflationary.

Harshpati Singhania of J K Group echoed similar views. "Increase in excise duty will have inflationary implications," he said.

The government, hard-pressed for cash, proposes to levy additional indirect taxes of Rs 45,940 crore for 2012-13 at a time when the industry is facing slowdown in demand.

"...deficit is still high which is disappointing. Things are going to become costlier for final consumer," Godrej Group Chairman Adi Godrej said.

Assocham President R N Dhoot said that he was expecting that the personal income tax exemption limit would be raised to 2.5 lakh per annum. "It is not done which is disappointing."

However, certain initiatives like liberalising the external commercial borrowing (ECB) rules and boost to investment particularly in infrastructure sector were hailed by industry leaders.

The BSE benchmark Sensex was almost flat during mid-day after the Budget was unveiled.

For very Senior Citizens (80 years and above), the income tax exemption limit will be Rs 5 lakh; 20 per cent will be levied on income between Rs 5-10 lakh and 30 per cent for above Rs 10 lakh.

On implementation of DTC, Mukherjee said, "We received the report of the Parliamentary Standing Committee on March 9, 2012. We will examine the report expeditiously and take steps for enactment of DTC at the earliest."

The DTC Bill seeks to replace the half-a-century-old Income Tax Act, 1961.

The savings bank account deductions, Mukherjee said, will help small tax payers.

"This would help a large number of small tax payers with salary income of up to Rs 5 lakh and interest from savings bank accounts up to Rs 10,000, as they would not be required to file income tax returns," Mukherjee said.