Reactions to Union Budget 2016

A. Vellayan, Executive Chairman, Murugappa Group


29 February 2016: The Finance Minister has attempted to present a Budget that will give impetus to the agriculture sector, while maintaining fiscal discipline.

The Budget initiatives address the needs of the Agriculture & Rural Sectors

The emphasis given to Irrigation, Soil Health, increased use of organic fertilisers and developing a Unified Agriculture Marketing e-platform are steps in the right direction. The reduced excise duty on micronutrients will help its wider application. The creation of the dedicated Irrigation Fund with an initial corpus of rs 20,000 crores will help to increase the overall area under irrigation over the long term. The increased allocation to MGNREGA & the announcement of rs5500 Crores under PM Fasal Bima Yojna are welcome moves. The Government is also piloting the Direct Benefit Transfer for Fertiliser to curb leakage. However, the much-anticipated demand of increasing urea prices to help in balanced nutrient use has been given a slip.

The Price stabilization fund created earlier for Sugar, has been now extended to Pulses. We look forward to a similar support in the coming years for other critical crops as well. The Finance Minister has also ensured fund availability for these schemes, through the Krishi Kalyan Cess.

In the Financial Services Sector, we welcome the announcement allowing tax deduction in respect of provisioning of bad & doubtful debts. We hope that the amendment of the SARFAESI Act and the Bankruptcy code will strengthen the Financial Services industry. We look forward to the notification of SARFAESI Act on Housing Finance, announced in the last year’s Budget, to be expedited.

There is continued focus on financial inclusion by the announcement of ATMs & Micro ATMs in post offices. The Government’s plan to list Public Sector General Insurance companies in Stock Exchanges will help strengthen the General Insurance Sector.

The announcements for settlement of pending taxation matters will help resolve long overdue cases, and the simplified process of declaration of undisclosed income is likely to bring in new tax payers.

From an infrastructure perspective, the increased focus on construction of roads and highways, creating an enabling ecosystem for Public-Private partnerships for projects and easing the passenger traffic system by creating avenues for more operators, will have a positive cascading effect in the overall economy.