Business Today

No effort to curb black money

An opportunity has been wasted in this please-all Budget, says Harsh Goenka of RPG Enterprises.

Suman Layak | Print Edition: March 20, 2011

Only one crore?" asks Harsh Vardhan Goenka. It is the first reaction of the Chairman of RPG Enterprises as he listens to Pranab Mukherjee's speech. He has just heard the Finance Minister announce a Rs 1 crore award in the memory of Rabindranath Tagore, whose 150th birth anniversary fell last May. The award will be given for promoting the values of Universal Brotherhood, so dear to the late poet's heart.

"I was expecting the Finance Minister to come out with some concrete steps against black money," Goenka adds after hearing Mukherjee's proposals on curbing illicit wealth. "This was a good opportunity. The atmosphere was right to offer a scheme to bring black money out and into the system."

The venue is the boardroom at RPG House on Mumbai's busy Annie Besant Road where top executives of different RPG companies have gathered to watch the FM's speech together. Large paintings of top artists like Jehangir Sabavala and Laxman Shreshtha hang on the walls. The executives include group Vice President Suresh Mathew; Goenka's son Anant, now Deputy Managing Director of CEAT Ltd; Paras Chowdhary, Managing Director of CEAT Ltd; Sunil Sapre, Chief Financial Officer of CEAT Ltd; A.S. Chouhan, Chief of RPG's speciality sector (Raychem, Harrisons Malayalam and RPG Life Sciences); Sachin Raole, CFO of RPG Life Sciences; and Vardhan Dharkar, CFO of KEC International.

I was expecting the Finance Minister to come out with some concrete steps against black money. This was a good opportunity. The atmosphere was right to offer a scheme to bring black money out and into the system.
For the first half hour as Mukherjee speaks, there are few comments from those watching. Someone notices that the ITC Ltd scrip is going up and chuckles. ITC usually goes down on every Budget day as proposals for higher excise on tobacco are announced. Harsh Goenka joins the group at around 11.40 a.m. Coffee and biscuits are served.

Shortly after noon, Chowdhary notices that the graph of the rupee's value on the TV screen is falling. "Why?" wonders Goenka aloud. "Perhaps because there were expectations on foreign direct investment and nothing has come through," suggests Chowdhary.

Soon after, the Budget announcement of the lowering of the surcharge on corporate tax from 7.5 per cent to five per cent sets the room abuzz. Does CEAT stand to benefit? Sapre, however, points out that another proposal - the increase in the minimum alternate tax rate from 18 per cent to 18.5 per cent - might well undo any benefit from the surcharge reduction, at least for CEAT. The reference to people wanting to import works of art and antiquity for exhibition in the speech immediately perks up Goenka - ever the connoisseur.

As the speech draws to a close, others note that the Sensex is doing well. Anant Goenka feels that the encouraging fiscal deficit numbers have kept the market buoyant. The consensus in the boardroom is that Mukherjee has done a good job. As Chouhan says Mukherjee has rightly tried to tackle inflation - which was primarily supply side inflation - by improving distribution and cold chains. The announcements that show the government will stick to a timetable for introducing both the Direct Taxes Code and the Goods and Services Tax are welcomed.

But Harsh Goenka feels Mukherjee could have been more ambitious on disinvestment. The Budget announced a target of Rs 40,000 crore. Goenka feels at least Rs 1,00,000 crore could have been raised in the coming financial year through disinvestment of government companies even while retaining control over them. "My expectations were fairly low," Goenka adds.

"The Finance Minister has pleasantly surprised me by not going in for populist measures. He has balanced the needs of the corporate sector and consumers." He also says he had expected some announcements relating to limited liability partnerships, but there had been none.

Goenka sums up: "Usually a budget evokes mixed reactions. Some people at every gathering are happy and some are unhappy. But today no one seems unhappy."

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