By Ankush Chibber,01-Mar-2013
Sometimes, just sometimes, you don’t want to have to say “I told you so”, and this is indeed one of the times.
The Indian finance minister, P Chidambaram, stood up in the Indian Parliament at 11 am on the last day of February to present one of the most eagerly anticipated budgets of our time. And like so many before it, Budget 2013 disappointed.
The last time I wrote here , I looked at how the food and beverage industry has been demanding lower taxes and excise duties. My prediction, if you didn't read it, was that the finance minister would be loathe to do any such thing. A widening deficit and an election year would deter him from any such favorable action towards the industry.
And that’s just what happened. In fact, even before the minister got into the nitty gritty of the budget, he made clear that the current account deficit is a worry, and something that would determine the direction of his economic measures.
As expected, the industry’s demand for the government to reduce CENVAT on processed food products by almost half–from 12% to 6%– didn't even given a mention. Our prediction was that it would be hiked to 14%, but thankfully for all, the minister did not go in that direction either.
The second major demand by the food processors has been that the excise duty on food processing equipment also be reduced from 12% to 6% in order to decrease costs and increase production in the coming year.
No love there either.
Instead the Budget introduced a hike in the surcharge paid by domestic companies earning more than Rs10 crore (US$1.8m) from 5% to 10%, while for foreign companies, this has been increased from 2% to 5%.
Say bye-bye to a better bottom line.
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