I find the budget quite positive. This budget will not hamper the India growth story in any way. It will, rather, give growth a push. As we are dependent heavily on the infrastructure, the budget instills in us the confidence that we will always be in business. Keeping the circumstances around the world in mind, the budget has come as a very balanced exercise and promises not to adversely affect growth in any way. Yes, there are a few blips, minor irritants like the hike in the import duty. But then, a slight hike from 23 to 25% will not affect us much as we have seen a time when we were paying a duty of 100%. Moreover, we are aware that if the government has to keep the growth story on track, it just has to do it. Our margin will be affected slightly but we are not complaining. The important aspect is that the sentiment of the industry is high and positive. India is on the right track. We will grow. We will stay in business.
This budget seems to be very positive for businesses and people. But it will push inflation further. Petrol and diesel prices have gone up which will shoot up travelling cost. All these costs go down to the common man. Whatever taxes have been reduced, are actually eroded by such costs. Ours is a service industry. Our people have to travel. Even the manufacturer will add the travelling cost and supply products to us. Excise duty has increased too. We cannot pass on these costs to our customers. We will have to bear them because we operate on wafer-thin margin. I really didn’t expect much from the budget as ours is a coalition government but what irks me is that the entire budget process circles around the salaried class and business people. The agricultural sector, which has some extremely rich people, is left untouched because of political considerations. Moreover, we are not saving on income taxes except the surcharge. Hence, we will find it difficult to stay in business.
Overall, the budget is good as the government has given relief to the salaried class and promised to reduce the prices. If prices reduce, it will be a good thing. It hasn’t increased the service tax too. But our conveyance cost will drastically go up, import cost will go up and as a result, minimum wages will go up. Let us see if the industry can take the beating. Earlier, the customers were willing to bear such costs but now since the recession hasn’t completely bid us goodbye, they may not want to take these costs. We can pass on only some of it. Fuel cost has gone very high. That will affect our business. We were expecting rebate on income tax but it hasn’t come on our bracket. So, fuel cost and import costs will affect us hard, we feel.
There is an overall hike in the total import duty component which is certainly a challenge that companies like ours have to face. But I presume we will have to live with it this year. We do not have an association of this industry and probably our finance minister does not know our challenges of working today for a cleaner tomorrow. If he knows this – I am sure duties will come down. We import in Euros and not in dollars which itself was a challenge whole of last year also. We have to clearly put better effort in our business and offer better education to our customers and show how with number one brand of machines they can accomplish multiple tasks. This industry needs an association to be able to represent such issues to the Government. We hope next year we have a better representation and of course, results will also be better.
Overall, the Finance Minister has done a good job for the financial health of the country because reducing the fiscal deficit from 6.5% to 5.9% is a commendable job. But we just cannot ignore the 2% hike in the excise duty. I am into chemicals and in such a cut-throat and competitive industry where even a paisa per square feet is calculated, this spells disaster. This is going to adversely impact our business. As far as machines and products are concerned, they cannot easily be replaced but chemicals can be replaced so easily with water. We had wished that the excise duty would be rolled back but that hasn’t happened. When the government spoke of green measures and encouraging eco-friendly and bio-degradable products, there was no sector specification added to that. It should have, as the cleaning industry is responsible for heavy emissions which can be controlled by cost-effective methods.
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