Budget 2018: Rural schemes welcome but execution key, says Harsh Mariwala


While welcoming the rural focus in the Union Budget 2018, Harsh Mariwala, Chairman of FMCG major Marico, said execution will be the key.  NITI Aayog, said Mariwala, will play an important role in executing these projects.

He said that inflation is a bigger worry than the fiscal deficit. “At 3.3-3.5 percent, the fiscal deficit is okay. Inflation is a larger worry.”

Excerpts from the interview:

This year’s Budget has given a lot of room to rural India.

A: Yes, I think it is one of the themes. But 2-3 things need to be looked at.  The Government has announced programs to uplift the farming sector, or the support prices, and housing. A lot depends on the execution. To me, that is very important. Intent is one, but execution is also very important. So I hope the execution is good. Niti Aayog will play an important role in execution and they have been doing a good job, so I hope that the execution is good and a lot will depend on how it is executed.

Number two, the big announcement was in the area of healthcare in terms of insurance. A lot of noise has been made – where are the funds coming from? If there are 10 crore families, and if on an average the premium is Rs 4,000, then that means almost Rs 40,000 crore of spending. So, I do not know where that money is going to come from.

The third point I want to say is there have been steps taken to increase remuneration to farmers. Even the import duties on many of the products have gone up. So I believe that that may lead to some inflation. If the inflation goes above a certain point then that is not good from the point of view of next year’s election.

Do you see the spends putting pressure on the fiscal deficit?

A: I think at 3.3-3.5 percent, it is okay. inflation is a larger worry if it is going to be a cost led inflation.

The Budget seems to have  ignored the middle class.

A: Yes the middle class as well as the rich in terms of direct taxes. I thought direct taxes would be simplified, just like they have done GST. But that opportunity has been missed.

Do you think the Budget was also political?

A: I think there was some element of looking at the next year’s elections. Then, there are also the sectors which have not done well. So one has to say okay, they have not done well that is why it is done politically. I think it is a combination of both.

Are you a bit disappointed at the corporate tax part?

A: The Finance Minister had given a promise a few years back and also the trend internationally also is to reduce tax rates. So to that extent…he is saying that 99 percent of the companies are covered, but 99 percent may be contributing just 20-30 percent of corporate tax.

There is one view that the reduced corporate tax will help the MSMEs in a big way,  and there are many of them in the FMCG sector. Do you think so?

I do not think so. If you are saying that whole annual turnover is Rs 100-150 crore, and the profit is in the of Rs 10-15 crore, then 5-8 percent reduction is not a big thing.

Do you see the rural push benefiting the FMCG sector?

A: If it is executed well, yes, certainly. It may take some time. All these things take time.moneycontrol