The industry on Friday Budget for being good for both the industry and the common man, while adding that some aspects, nonetheless, disappointed them.

Ashwini Kakkar, chief executive officer and managing director, Thomas Cook [Get Quote]:

The industry on Friday Budget for being good for both the industry and the common man, while adding that some aspects, nonetheless, disappointed them.

"It is a growth-oriented Budget, which is also very well-balanced. There seems to be an emphasis on getting more private sector units listed and it definitely is a very welcome move for the capital market. As and when it happens, the listing of more and more public sector units will have a good impact on the economy," S Hajara, the chairman and managing director of the Shipping Corporation of India [Get Quote], said.

"Overall the Budget was populist but there was a lack of encouraging impetus to the hospitality industry and the tourism sector. It failed to grant infrastructure status to the hospitality business under Section 80-I. Tax holidays are available only at heritage sites and so this measure is restrictive to growth. Tax holidays should have been given on a pan-India basis considering that there is a shortage of one lakh hotel rooms," S P Jain, senior vice president of the hotel and restaurant association, said.

Ashwini Kakkar, CEO and managing director of Thomas Cook, however, was happy about the five-year tax holiday. "It will end up benefiting about a 100 hotels, which can come up near heritage sites," he said.

He, however, said he was zapped by the imposition of service tax on money changing. "Already, when you change, say, $1,000, you get only $980. Now the customer will lost a further $3. This kind of service tax is not seen in any part of the world. After all, it is just a bank transaction," he said.

Another cause for worry, according to Kakkar, is the service tax on tour operators.

"They are the ones who generate maximum employment and drive the industry. A service tax on such a nascent industry is a point of consternation," Kakkar said.

KJ Rao, the chief financial officer of CEAT tyres, said substantial amount has been allocated towards populist schemes such as public distribution systems, rural employment scheme. The writing off of the debt to farmers has taken large allocation of Rs 60,000 crore, he said.

"For the corporate sector, the budget is neutral except for Pharma, Health and Auto Industry. For these industries the Budget has been positive.

It is also positive for the tyre Industry in particular. The reduction in excise duty structure would facilitate higher demand for cars and for tyres. Cut in mean excise duty from 16 per cent to 14 per cent for tyres is a welcome measure. CEAT has decided to pass the entire 2 per cent benefit to its customers. Cut in CST by 1 per cent should have positive impact on profits of the tyre industry," he said.

He also said that the increase in short term capital gain tax is a dampener to the stock market, albeit temporary. "The reduction in incidence of Income Tax to the individuals are positive steps in the right direction," concluded.

Harsh Roongta, CEO of Apnaloan.com, a personal finance venture, said the Budget appeared to have done enough to enjoy the support of India's burgeoning urban middle class. "The long awaited change in the IT slab with the kind of boldness last displayed in 1997, needs to be commended. This will clearly lead to substantial tax relief for an income tax payer. Also, the decrease in the General Cenvat (excise) rate should lead to some price stabilization across the board," he said.

Another good thing, according to Roongta, is the clarifying amendment of the Income Tax Act on the reverse mortgage scheme to enable very beneficial schemes for senior citizens to finally take off.

"Having said that, the other side kicks in. The big Rs.60, 000 crore giveaway (supposedly to benefit poor farmers) is the clear preparation for the 2009 elections. Whether it helps the ruling alliance to gain some votes remains to be seen, though the impact on the lending system will clearly be bad. This is clearly an invitation to default on loans knowing that, come an election year, the government will bail them out. This is a huge dampener for honest borrowers who repay their loans in time," he said.

"It is also an invitation to borrowers to take a fairly adventurous position on the agricultural projects with a clear knowledge that if he succeeds, the gains will be his. But, if the project fails, the government is clearly there to bail them out," he warned.

When it is the taxpayer's money that is used to give away, they surely deserve a voice in this decision, he said.

Kakkar, however, praised the move. "It is a fantastic move, though it is very clear it is political. All these loans in the books of public sector banks have been written off as of December 2007. Since the government will pay the banks, they will become stronger. The small and medium agriculturalists will benefit. And most important, this move may help the agriculture industry, which has seen growth rates like 3.7 per cent in 2006 and 2.6 per cent in 2007, to see a growth rate of 5 per cent, at least in the short term," he said.

Subhash Sethi, the vice chairman, Subhash Projects & Marketing Ltd, said the Budget is aimed at facilitating private participation for continuing robust infrastructure growth especially in water, power and sanitation as indicated through Rs 800 crore in Accelerated Power Development and Reforms Project, Rs 5,500 cr in Rajiv Gandhi Grameen Vidyutikaran Yojana and Rs 6,865cr in the Jawaharlal Nehru Urban Renewal Mission.

"The Budget highlight for the infrastructure companies is the waiver on dividend distribution tax on the subsidiary company which is a great relief. Extending of Section 80-M benefits to Special Purpose Vehicles will also boost infrastructure growth. The disappointment is in terms of continuing high interest rates on borrowings," he summed it up.

R Swaminathan, the vice president & national head of Mutual Funds, IDBI Capital, said the Budget is primarily agri-oriented due to the size of the waiver granted to overdue loans. He said it also provides an increase in disposable income of the individuals that will spur consumption demand. "At this juncture, keeping inflation as the focal point the Budget is also trying to guide through reduction in excise duties. The dividend distribution set off available to the parent/a sponsor company is a good measure. The short term capital gains increase is mainly to be taken out of the market gains and may result in encouraging long-term investments.

"The extension of TUF will encourage the textile sector at this hour of dire need of assistance. Further the sectors like Hospitals, healthcare, education are all considered with sops with a definite view to expand the benefit to all parts of the country.

"The introduction of new financial instruments on derivative side is positive step

"However, the encouraging factor to enhance the savings for long-term development of infrastructure is absent. It is a welcome point that PAN is the identification number. Of course, the disappointment prevails from the corporate side for not getting the required tax sops," he said.

The revision of income tax was universally welcomed. "It is a very good move. The revision of tax slabs is something that everyone was looking forward to and the finance minister has delivered on it," Kakkar said.

Dinesh Vyas, senior Supreme Court advocate, said the finance minister was trying to put in place a regimen to control the inflow of foreign direct investment. "We only hope there is nothing very drastic that will frighten the institutional investors. If there is anything on those lines, it will have a direct impact on the markets and the economy," he said.

Summing it all up, Kakkar drew the three most important positives and negatives.

"The revision of tax slabs, the reduction in indirect taxes � which indicates the finance minister is looking at doing away with VAT and replacing it with a uniform GST at around 14 per cent � and the sop for the agriculture industry are the three most important features. Agriculture, in particular, has been the biggest drag on our economy in recent years, which have seen service growing at 12 to 13 per cent and manufacturing growing at 10 to 11 per cent. His policy for agriculture will enable a short term spike in the growth, which will contribute positively to the overall growth of the nation," he said.

The biggest disappointment, according to Kakkar, is that taxation has not been simplified.

"Nor have surcharges been removed. Taxation could have been simplified. Now it is so complex, with the common man having to pay tax at various stages.

"Also, the finance minister seems to have missed the Laffer Curve effect, which is proven. By levying a simple flat rate, you can draw more people into paying taxes. These days, not many people are bent on evading tax. They just want to pay it and sleep in peace. So, if the process is simplified, many people will come forward to pay taxes.

"The third biggest disappointment is that nothing has been done to tackle unemployment.

This past year has already seen a one per cent growth in unemployment and the existing schemes do not inspire confidence," he concluded.