Budget has been 'fairly disappointing'

Anand Mahindra, vice chairman and managing director of Mahindra & Mahindra gives his perspective on the Union Budget. In his view, the budget has been 'fairly disappointing' overall.

According to him, it was disappointing that the non-plan expenditure had gone up also the fact that the revenue expenditure had increased.

He adds that the Finance Minister had not moved fast enough on the tax front. However, he is pleased with the Finance Minister's moves on the customs duty cut. Mahindra was hoping for more big ticket reforms in the Budget.

Excerpts of CNBC-TV18's exclusive interview with Anand Mahindra:

From a CEOs perspective - specifically on tax proposals, has the FM left you happy or disappointed?

It depends on whether you are looking for this Budget to be framed by an architect or by a mechanic. I think this is more a mechanic's Budget in the sense there have been very small refinements. I was hoping for something a little more architectural which would signal to the world that big ticket reforms are still pretty much on the agenda. When I mean big ticket I mean I was looking for some moves that would really propel India towards being a low cost economy.

In that sense, the duty cuts I am pleased with, as far as the customs duty is concerned, I am pleased with the movement at least, although I would have been to see him right towards the targeted ASEAN levels of duty. On the tax front frankly not really, I don't think there is anything that has moved fast enough especially on CST, I think we could have moved faster towards the centralized VAT regime that we are all hoping for. So all and all - fairly disappointing.

Specific to corporate tax - the fact that neither the surcharge has been removed and there is an additional cess?

I think it was to be expected if one knew that the deficit wouldn't be reduced to the extent that we were anticipating given the buoyancy in the revenue front in the topline of taxes. I think what has been very disappointing is the fact that non plan expenditure has gone up, revenue expenditure has gone up so much and it has virtually cut all the gains of the spectacular revenue increases and that I think is actually quite disappointing.

So on the back of that it was not surprising that they were not looking to cut taxes and excise duties. To me that's fairly disappointing and one would hope that there would be greater measure of aggression on trying to reduce non plan expenditures, so that one can spend more on plan and be a little more generous on tax cuts in future.

Why do CEOs expect to see reform measures every year last three years he - hasn't done anything to build such expectations, has he?

I agree with you, frankly that's one of my own lines in the past when people have asked for either score on the Budget or looked at this as a big bang, I am culpable also for saying that we should not be looking for big moves and that reform should come throughout the year.

But as I said if you look at this and we say that all right we are going to resign ourselves to this being a refining Budget, a mechanic's Budget every year, that's fine but there are still some undone moves in terms of speed of movement towards a low customs duty regime. We are moving on a trajectory, I think we could move faster, the same goes for VAT.

So I think there are a couple of big moves which are related to signaling that India is really the only competitor of China in the world and if we are going to move towards being a very competitive economy being a low cost economy both in services and in manufacturing then one would have wanted to see the Budget as an instrument to raise the acceleration rate towards those targeted duty and tax level. That's what I meant by architectural moves, which I didn't see.

Just one specific word on your sector - when we spoke at the last Budget, you had expressed the hope that there might be an excise duty cut for larger passenger vehicles as well. Is that out of window now?

As the old saying goes, hopes spring eternal, so I suppose I will be meeting you next year, speaking to you next year with the same hope and that hope is never going to die. There is a promise that all duty rates will come down and will gravitate towards the 16 per cent level so clearly that intent is still there. Obviously there is no signal in this Budget of when we are going to get that but we will keep hoping.

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