Post Budget 2016 -17
Statement : Mr. Sumit Sawhney, Country CEO & Managing Director,
Renault India Operations
A constructive budget which will be instrumental in
laying the foundations for sustainable long-term growth
Overview
The Government has succeeded in ensuring that the Indian
economy has held its own despite the prevailing uncertain environment and
global headwinds.
At a broad level, Budget 2016 is constructive and will
be instrumental in laying the foundations for long-term sustainable growth. The
9 pillars on which the budget is based on addresses measures for growth, while
keeping the fiscal deficit within the set limit of 3.5% and curbing inflation
for FY 2016-17.
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| Sumit Sawhney, Country CEO & Managing Director, Renault India Operations |
The Union Budget 2016 rightly focusses on the core
issues which needed attention, including agriculture, social programmes, rural
development, education with skill development, infrastructure, financial reforms,
policy reforms in terms of ease of doing business, fiscal discipline and tax
reforms. Fundamentally all these measures will go a long way in stimulating the
domestic demand, which clearly is the need of the hour, especially in wake of
the prevailing global uncertainties.
As was much desired, the budget has rightly focused on
positive measures to give impetus to infrastructure growth. Although we will
have to study the fine print of the budget in terms of clear programs to boost
investment, manufacturing and skill development, the directional focus is in
sync with the overall expectations to boost growth. This budget will go a long
way in further bolstering India’s position in the global economy.
The budget also reflects Government’s focus on ‘Make in
India’, as it announced measures to enhance domestic competitiveness in sectors
including Defence, IT, Textiles, et al.
Perspective on the Automobile Sector
The budget clearly focusses on a long-term vision, aimed
at high growth, together with emphasis on the fiscal deficit, and keeping big
bang investments in check. But, policies for the automobile sector remained
largely unchanged.
The automobile industry features in the ‘Make in India’
program, and has been identified as one of the 25 thrust sectors outlined for
growth. Together with its role in making India a manufacturing powerhouse, the
common hope across the automobile industry was that the Government includes
some industry friendly policy decisions which will build confidence.
Citing pollution and the traffic situation in cities as
a matter of concern, there is a proposal to levy a cess of 1% on small, petrol
and CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher
engine capacity vehicles and SUVs.
While doing this, the industry was hoping that the
Government should have taken progressive steps such as introducing a ‘scrappage
incentive scheme’, to keep older cars off the roads and would not have impacted
the industry. Such a policy will benefit the environment, reduce fuel
consumption and also propel further demand for greener and efficient vehicles.
The industry was also hoping for excise duty reduction
to be reintroduced and a roadmap on GST implementation, as a unified excise and
taxation structure will go a long way to benefit the industry.
Although the budget didn’t have much for the automobile
sector, we are hopeful for some pro-business policies on a continual basis to
benefit the industry.
A positive to the auto sector is the investments and
reforms in agriculture and infrastructure sectors, which will have a rub-off
effect on the core sectors that drive the economy.
Closing Comments
To conclude, Budget 2016 rightly focusses on the core
issues which needed attention. It will go a long way in putting India back on
the global business radar by making it more investment-friendly, enhancing the
ease to do business, lowering subsidies and optimising its allocation.
It also had a strong welfare message, taking into
consideration the requirements of a wide sections of the society. From housing
and electricity, to water supply and employment, the budget had a strong vision
for the people of India.
In a nutshell, the Modi led government has triggered the
right chords, keeping its promise of
‘Sabka Saath, Sabka Vikas’.
Sumit Sawhney
Country CEO & Managing Director
Renault India Operations
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