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Auto Budget 2015: Vinod Dassari from Ashok Leyland comments

Team OD  /
28 Feb 2015

"The main budget feels like solid middle order batting that follows an explosive opening knock by the Honorable Railway Minister. Three themes in this budget are critical to industry.

The first theme is infrastructure. Over 100,000 km of roads have been targeted over and above the massive push in the rail sector, in addition to the discontinuous investments in public amenities through the Swacch Bharat Abhiyaan. The massive boost in infrastructure spend (Rs 70,000 crores), as well as the mechanisms announced to fund it, will kick-start a virtuous cycle, resulting in significant primary demand for commercial vehicles.

The second theme is grassroots entrepreneurship. MUDRA bank, formed to refinance MFIs, as well as the Jan Dhan - Aadhaar- Mobile program are both directed towards creating grassroots entrepreneurs. By entering the formal banking system, the poor get access to lower cost finance, especially once the overdraft facilities kick in in Jan Dhan accounts. Grassroots entrepreneurs require low cost transport, and this will drive demand for SCVs.

The third theme is reform. Introducing a new bankruptcy law, announcing a roadmap to lower corporate taxes and other such actions are clearly directed towards making India more competitive to do business. Continued push in this direction will encourage more players to enter India, bringing investments as well as boosting economic activity.

While there has been no excise duty modification in the automotive sector, I believe that long term demand creation is more sustainable than short term sops to boost consumption. The government has moved in exactly this direction with this budget.

The Government has also correctly decided to drive small, incremental improvements rather than big bang reforms. In our own experience, the centerpiece of any turnaround is not a big, innovative idea but Mission Mode execution. This Government has demonstrated its ability to execute in Mission Mode, for example, during the rollout of Jan Dhan Yojana. I believe that this will continue. "

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