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Budget should provide a better business environment: Pankaj Munjal

Hero Cycles Co-Chairman and Managing Director Pankaj Munjal says a good Budget has to ensure economic growth, inclusive growth, employment generation, inflation control and minimizing of the fiscal deficit.
Full coverage: Budget 2013-14

N. Madhavan        Last Updated: February 21, 2013  | 11:43 IST

Business Today's Senior Editor N. Madhavan spoke to Hero Cycles Co-Chairman and Managing Director Pankaj Munjal on his expectations from Budget 2013. Excerpts:

Q. What, in your opinion, would make a good Budget? What measures or proposals would you like to see?
A Budget is an accounting guide to act upon throughout the year with minimal effort while producing maximised results. A good Budget is very important so that there is an optimum use of the common man's money. My idea of a good Budget would one which is concerned with bridging the gap between the poor and the rich, encouraging investments and capital formation. A Budget should give sops to the common man and announce measures to tackle the challenges of inflation, energy security, decreasing value of the rupee, etc. Some strict reforms will be needed to stabilise the economy. Micro, small and medium enterprises (MSME), which are of a common man's concern, must be given incentives in terms of tax deduction and other concessions so that basic necessary things remain affordable. A good Budget has to ensure economic growth, inclusive growth, employment generation, inflation control and minimizing of the fiscal deficit. The government has to improve the efficiency of its spending, and its control on non-Budget expenditure. Impetus must be give to declining industries, such as the bicycle industry. Each industry must be benchmarked against its counterpart in China, and Budget measures proposed to ensure overall competitiveness.

Full covergae:Union Budget 2013-14

Q. Do you see a case to increase income tax rates on the rich?
I am in favor of higher tax for the super rich category (those with taxable income higher than Rs 1 crore per annum.). At the same time, government should explore means to prevent tax avoidance. There are instances of some self employed people who have higher incomes but pay lower taxes than the salaried class.

Q. If the Budget does not meet expectations, do you fear that business sentiment will once again dip?
I'm afraid so. In the current scenario, every industry is looking up to the finance minister for some support and expects steps towards a better business environment in India. Saying that, Indian businesses have always respected, accepted and adapted to the Budget. The industry environment can't afford another dip in sentiment. People are looking forward to promising measures ensuring investment flows in the country, fast track growth of infrastructure and employment opportunities.

Q. Specific to your sector, what could the current Budget do to improve conditions?
The bicycle is not only the common man's choice of vehicle, but also the choice of the environmentally concerned. Hence, the expectations I am mentioning below should be fulfilled. Only then can we hope to increase the size of the industry from the current $1.2 billion to match that of the United States' $5 billion.

  • Removal of the two per cent increase in excise duty that was levied in the last Budget. While this will be a small sacrifice for the exchequer, for the common Indian it will be a big relief. The government should also consider offering tax incentives to buy bicycles
  • The Chinese bicycle industry is a mammoth $8 billion compared to India's $1.2 billion. This is primarily because they have a favorable export policy and much better infrastructure. The export of Indian bicycles will reach new heights if supported by the government by making necessary changes in the policy. Our request to the finance minister would be to reimburse the inland freight up to port which is stalling the growth prospects of the export segment.
  • The government needs to negotiate with the European Union to get Most Preferred Nation (MFN) for export of bicycles to Europe.
  • The government needs to focus on infrastructure development in cities to promote cycling.
  • The government should promote cycling as a environment friendly means of transport, thereby reducing congestion and pollution, especially in big cities. In nations like the Netherlands and the United Kingdom, there are designated cycling lanes. The government should initiate a similar concept, at least in metro and tier 1 cities. It could run campaigns pointing out that if more people use bicycles for transport, our nation will have a lower carbon footprint than others.
  • Google street view has been asked to create special maps for cyclists. The government should promote these.
  • Small subsidies could be offered to companies to encourage a corporate culture of employees coming to work on bicycles.
  • The government should provide direct subsidy to the section below the poverty line to buy bicycles improving their mobility.  
  • To be at par with China, our government needs to consider raising duty drawback from 12.3 per cent to 15 per cent of the price of the product plus transportation (FOB price). Alternatively, it could consider a bonus incentive of two per cent of FOB price as applicable to select industries currently.
Q. Which Budget, in the recent past, do you remember as having been a good one?
The union Budget for 2008/09 was the best one. This was the last Budget presented by P. Chidambaram. This Budget saw the special attention paid to the MSME sector. This budget was special as it managed to grow the income of the nation without putting unwanted pressure on sectors in need of support. It was, in a true sense, a common man's budget.

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