If one were to pick the most important thing on the minds of CEOs days before UPA-II's final budget, it's Fiscal Responsibility. Don't overspend, keep the budget deficit in check, don't crowd out private investment. And while you're juggling your resources to do just that, Mr Finance Minister, don't go overboard raising taxes either.
That's the message from the HT-MaRS pre-budget survey of over 40 CEOs, representing a random mix of small, medium and large-sized companies.
Most respondents have tempered their expectations of growth in the coming fiscal, with 62% saying it will be below 6%. The past year saw growth expectations being repeatedly adjusted downwards, and the overall sentiment, according to the survey, remains gloomy. "I am not that optimistic, but once investment picks up, the outlook for all sectors will change thereafter," said Mukul Kasliwal, Chairman, MW Corp, a power and infrastructure firm.
Given that this is the current government's last opportunity to show that it is serious about putting the economy back on the growth trajectory, industry heads surveyed said that infrastructure development, checking inflation and giving industrial growth an impetus should be the top priorities in this budget. Many have also called for the implementation of the Goods and Services Tax. "Implementation of GST in a committed time-frame will boost investor and business sentiment," said Meera Sanyal, Country Executive India, Royal Bank of Scotland.
Given the squandered opportunities in the past two years, do CEOs feel the government will use its last budget to announce populist schemes to gather votes for next year's general election? Not really. 62% CEOs said that budget measures have little impact on voters' decisions, while 24% sounded UPA-II's death knell, saying that irrespective of the budget, the Congress-led government will find it difficult to return to power. "Most of the challenges for the country were self-made due to lack of leadership in firmly dealing with the issues in the past few years. After Mr Chidambaram took over, there is an urgency in dealing with critical issues facing the economy," said V Balakrishnan, board member and ex-CFO, Infosys.
Televison channels and newspaper offices may be abuzz this week, leaving no stone unturned in deciphering every word Chidambaram says on Thursday, but how important is the budget for industrialists? Over half the respondents said that neither are they planning to put off any major investment decisions, nor will the budget impact hiring or salary related calls for them. Heck, a fifth of CEO's won't even watch the budget speech!
There have been growing calls across the globe for raising taxes on the rich. Wipro Chairman Azim Premji has been one of the rare Indian voices backing such proposals. 62% of survey respondents do no support any increase in taxes. "The FM can definitely consider taxing rich farmers and large landowners," said Kasliwal, hinting that expanding the tax base is a better option. Ajay Shriram, chairman & senior managing director, DCM Shriram Consolidated Ltd and vice-president, CII also supports expanding the tax base. "In a country of 1.2 billion, having only 1.4 million tax payers with income above Rs 10 lakh (and only 4 lakh assessees with income above Rs 20 lakh) seems really low!" he said. CEOs have also given a big thumbs down to more subsidies or welfare schemes which drain the exchequer.
(With inputs from Zehra Kazmi)