Will Budget 2012 break policy logjam over FDI, infra spend?

by FP Staff  Feb 21, 2012 14:22 IST

#Budget 2012   #FDI   #fiscal consolidation   #GMR   #Infrastructure  

The two big events next month — the Union Budget and monetary policy review  — are driving high expectations among the bigwigs of   industry.

The infrastructure sector, in particular, has a long wish-list for the government. In recent times, it has been plagued by slow decision-making and high interest rates. Will the Union Budget 2012 do anything for this wheezing industry by breaking the policy logjam?

Reuters

A Subba Rao, chief financial officer, GMR, says that one should not have any expectations and "learn to accept what comes your way". "Yes, learn to accept what comes your way. This is the happiest way of living life," he told CNBC TV18.

Unfortunately, the government is not exactly letting him stay happy. "There has been a trust deficit" he told the news channel.

He thinks the government needs to stick to its word and not go back and change already-announced policies.

Companies make investments based on government decisions and legislation. For example, when the company started, there was no Minimum Alternative Tax or Dividend Distribution Tax. Now, however, the government has introduced them keeping in mind their revenue requirements.

However, he believes there are three priorities for the government.

The first is fiscal consolidation. The government needs to make efforts to reduce the fiscal deficit as that will benefit us in three ways, namely, make more capital available for the infrastructure industry, reduce the cost of capital and lower inflation.

Second, the government must look at improving urban infrastructure because it is a huge space for making investments. Third, the government must do everything it can to encourage foreign direct investment into India.

Overall, his message was that the the budget needs to embolden investors into investing capital in the country.

Watch the CNBC TV -18 video below.