Indian businesses located in the UAE termed their homeland's budget as "lacklustre" and asserted that they had expected more sops particularly as the budget comes amidst global economic doldrums.

Their comments matched those of the opposition party in the Indian parliament – the Bhartiya Janta Party (BJP) – that termed the budget "unimpressive".

However, Venu Rajamony, the Consul-General of India to Dubai, said the budget has paved a way for companies in the UAE to operate across sectors from infrastructure and housing to power and logistics. The highlight of the budget was perhaps a raise in allocation for its flagship rural job scheme the National Rural Employment Guarantee Act (NREGA) by 144 per cent to Rs39,000 crores (Dh29.53 billion). It is the largest Indian budget presented so far.

In India, the key benchmark indices plunged yesterday, led by a sharp decline in banking, metals and oil & gas stocks.

Finance Minister Pranab Mukherjee set a sharply higher fiscal deficit target to 6.8 per cent (of the GDP) for the financial year ending March 2010, the figure having risen from 2.3 per cent from the previous year. Though the finance minister doled out incentives to attract investments into infrastructure projects, he did not elaborate on issues like foreign direct investment (FDI), that is of particular interest to the non-resident Indians (NRIs).

NRIs in Dubai played down the fact that the government set a disinvestment target of Rs11.2bn (Dh848 mn) and one prominent businessman went ahead to call it a "joke".

In India, the Sensex slid to 14,043, down 869.65 points. The Nifty fell 258.55 points to 4169.99 point. Sector-wise, the reactions were cautious. The Bombay Stock Exchange (BSE) banking, the BSE metal index and the BSE power index climbed down by a few percentage points.

Among the budget highlights for investors in the UAE were introduction of investment-linked incentives in building of infrastructure and laying of cross-country oil and gas pipelines. The government yesterday abolished the Commodity Transaction Tax (CTT) that was announced in the budget the last year, but was yet to be implemented. The commodity exchanges in India and commodity traders in Dubai rejoiced the decision. People rued the raising of import duties on gold and silver besides raising of tax on imported set-top boxes.

Below are the some of the reactions:


Venu Rajamony, Consul-General of India, Dubai

The budget will open the doors to a large number of companies in the UAE wanting to work in India. While infrastructure projects have particularly strong opportunities, companies also want to move into sectors like logistics and power.

The government's commitment to constructing houses for slum dewllers is an attractive announcement for companies like Emaar that have evinced an interest in such projects. The ETA (Star) group based in Dubai has shown an interest in infrastructure projects. The (Al) Rostamani group has an interest in investing in power sector in India.


Paras Shahdadpuri, President, Indian Business and Professional Council

The budget lacked innovation and bold initiatives. The UPA Government was in a very strong and stable position where they could have come out with some bold initiatives in the field of infrastructure building and reduce the fiscal deficit to a manageable level between three and four per cent of GDP.

However, the finance minister deserves congratulations for giving special attention to agriculture sector, which engages 60 percent of the country's population although its contribution is only 18 percent to the GDP. The farmer has been given a very good deal by large loans at the reasonable rate of seven per cent interest per annum and also incentivised by giving one per cent rebate if current loans are paid in time. This will help about 40 million farmers. The budget is going in the right direction by giving focus to rural development. The fringe benefit tax (FBT) has been scrapped which is a good news for the corporate world.

In my opinion a few steps could have been taken to categorically announce more disinvestments in the PSUs, special incentives could have been announced for investments in the infra structure projects, in order to spur the dwindling exports, some tax exemptions to exporters could have been announced. What has not been adequately addressed is the focus on infrastructure which requires colossal amount of $500bn over the next five years. There is no answer where this amount will come from if India has to sustain the current or higher GDP growth of nine per cent. There is an urgent necessity of improvement of port facilities, road transport networks, power generation, setting up of more and better schools to feed the projected growth of nine per cent GDP per annum. Very special focus should be given to the tourism sector that has tremendous potential.

Unfortunately, the NRI has not been directly roped in the process of economic growth of India. There was nothing mentioned of this huge constituency of about 26 million. NRIs should be roped in the infrastructural, technological, industrial and economic growth of India by evolving specific and purpose-oriented schemes to attract their capital and technological involvement. This vast national reserve of India must be harnessed for India's speedy growth

The budget has minor concessions for exporters. With the financial downturn still on, we wanted to see more concessions to the export-oriented industry. There are two other aspects that I like: The support given to retired armed personnel and the setting up of a competitiveness council. Such a council will generate a spirit of competition both among national companies and international companies.


Prashant K Gulati, President and CEO, Optimistix Ventures, Secretary-General, IBPC

Overall it's a lacklustre budget but then with the finance minister walking such a tightrope, I would not have expected better. The IT industry has junked the budget because the proposal to waive taxes on software companies under the Software Technology Park of India (STPI) Act has been extended by just one year.

Scrapping of the fringe benefit tax (FBT), doling out of investments linked incentives and allocation of funds for setting up of and expansion of engineering colleges are some of the appreciable aspects. Enhanced allocation for Commonwealth Games and allocation of funds for constructing dwellings for urban slum dwellers are also the highlights of this budget.


Kamal Vachani, Director, Al Maya Group

The priority on infrastructure development and increased spending for farmers and the poor are the welcoming steps taken by the Indian finance minister. Five per cent customs duty on set up boxes will boost the local electronic industry and cut in customs duty on LCD panels from 10 per cent to five per cent, will benefit the industry in big way. Removal of surcharge on personal income tax will get disposal income for the people and extension of Tax Holiday under 10A/10B till 2011 will benefit the electronics and software industry and industry will scale to new heights. It's an excellent budget.


Bharat Bhai Shah, businessman and senior member of the Indian community

The finance minister has done more damage in his speech highlighting small factors. Privatisation of PSUs being ruled out, government inefficiencies will continue to rule and waste huge resources. Capital markets are disappointed on account of what's absent in the budget. Announcements of budget proposals is irrelevant and illusive because there is a vast gap between announcement and implementation. The finance minister has missed the bus.

Navin Kapoor, Managing Director, Xpertize United, Dubai

Indian finance minister had a difficult task of balancing expenditure on infrastructure development and welfare of common man with that of a very high revenue and fiscal deficit. The creation of national web portal to facilitate employment of youth in India is a step in the positive direction. The increased outlay over the interim budget for creation of technology institutions like IITs and NIITs are also step in a positive direction. The Gulf businessmen in gold and silver trade will not welcome increased customs duty on the precious metals but on the other hand infrastructure development would provide huge opportunities for Gulf companies engaged in the construction sector. There was no mention of NRIs in the budget and that is disappointing.


Suresh Warrier, Chief Executive Officer, Axis Bank, DIFC Branch

It's a lacklustre budget. We had expected a clear stand with regards to foreign direct investments into the insurance sector considering that's where people want to invest with a long-term objective. We had also expected an enhancement in the maximum permissible individual holdings in banks but that has not happened.


Jitendra Gianchandani, Managing Partner, Jitendra Chartered Accountants

India's 2009 budget is an inclusive one, and is on expected lines. The finance minister has done a good job. It is a mix of triangular factors – infrastructure focused, rural oriented and common man-friendly. It has a long term perspective and has a broad view as well. Achieving an overall economic growth of nine per cent is excellent, in spite of the global financial meltdown. However, the market has overreacted due to the hype created around the strong government that is at the centre. But those with unrealistic hopes will be disappointed. It is not necessary to announce all the policies on a single day, and it can be considered across the ensuing year. Also, one must keep in mind that a lot of reforms have already been done in the past few years. Hence expecting miracles on single day is not fair. The common man has been well-considered in this budget. Many positive steps have been taken, like the removal of FBT and personal surcharge, the implementation of GST and the increased investment in infrastructure and education. The negative points are that it lacks clarity in disinvestment plans, the MAT has been increased from 10 per cent to 15 per cent, the STT, corporate tax and the NRI have not been touched, and the fiscal deficit has increased.


Raju Menon, Chairman, Morison Menon Chartered Accountants

Indian Budget 2009-10 is a balanced and populous budget. This budget can be looked up as a start-up year budget for a five year budget plan to alleviate poverty by half. It appears to me that it is more of a socialistic policy budget. Rs100,000 crore (Dh75.8m) infrastructure project investments will generate a lot of employments in the rural sector. Abolishing of commodity transaction tax, surcharge on direct tax, fringe benefit taxes and reduction in various products excise duty (production taxes) is to support people during this economic slowdown. The major challenge in the budget is the increased fiscal deficit to the tune of 6.8 per cent of the GDP. It means increased expenditure outlay has to be financed from external debts. If the executions are proper, it is not a major worrying factor.

The fiscal deficit of the US is more than 12 per cent and the UK is more than 15 per cent. However, corporate sector and stock markets are not happy as their expectations were too high on this budget. Market expected more divesting than the declared Rs1,120 crores (Dh848m). Had it been divested, it would have wooed more FDI, which in turn would have boosted the stock market. There was no cut in the interest rate. Had there been any reduction, it would have supported the corporate sector during this economic slowdown.

Ram Buxani, Group President, ITL Cosmos-Group

Seasoned finance minister of India, who had occupied this position, even during the days of late Mrs Indira Gandhi, Pranab Mukherji in great humour indirectly admitted himself to be a honeybee who sucks the nectar from the flower without spoiling its beauty. As a result, while there is nothing for the Overseas Indians in the budget, not even a mention of appreciation, he has comfortably got away with meagre concessions in direct taxes. Better attention to roads and infrastructure project is indeed a worthwhile direction he has followed.

It was very encouraging when he mentioned that in a set time frame, income tax form is being made simple and user-friendly. After 60 years of independence, still the farmers have to depend upon the loans, although the government has brought down the rate in the current budget. It is high time the farmers are made part of the society, charged regular tax and paid adequately against agricultural product they produce. That agricultural product can be sold at a subsidised price. But farmers should be made responsible part of the society.

It would have been better, if the Finance Minister had taken some initiative to introduce social security.


Aswini K Bortoky, Managing Director, Car Lease

Being an ex-service man, I appreciate the increase in budget to meet the post-retirement benefits of Defence personnel. I also appreciate the increase in spending planned to secure the Indian borders.


Ashok K Gupta, Chief Executive, GCC operations, Bank of Baroda

It is a very balanced and pragmatic budget aimed at common man. It's an inclusive budget that will seep into the remote corners. The decision to ensure that every block in India has a bank is a highlight of this budget.

Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here.