The middle class and farmers have all the reason to rejoice but corporate India, barring a few sectors, remained unaffected by the annual exercise. India Inc has been expecting a fresh dose of boosters from Finance Minister P Chidambaram to catalyse growth.
Three sectors — automobile, pharmaceuticals and healthcare — were the main gainers of the budget proposals. Small car manufacturers, which dominate the auto sector had been slowing down due to a credit crunch effected by the RBI, is expected to buck the trend after a 4 per cent reduction in excise duty to 12 per cent.
The budget ensures a smooth ride for car manufacturers by providing a huge boost to consumerism, a very positive development for the economy overall. Tax incentives for hybrid cars provides a thrust to develop alternative energy sources to lower emissions and improve fuel efficiencies, said Alok Vajpeyi, vice chairman and managing director, Dawnayday AV Group. Healthcare and services companies received a stronger tax dose along with increased spending on healthcare making quality drugs and services more affordable. Construction and real estate companies are expected to gain marginally due to duty and CENVAT reduction and benefit from the amendment relating to dividend distribution tax from a subsidiary to parent companies.
The hike in the tax slab could have a positive impact on the insurance and mutual fund industries. The change in individual income tax slab will provide more disposable income in the hands of consumers. Keeping in view the saving habits of Indian households, some of this money could flow into savings, especially in long-term wealth creation instruments like life insurance and mutual funds.