Leadership Thoughts-Pawan Goenka
globalhunt leadership thoughts

Diesel tax will not dent overall sales: Pawan Goenka, ED, Mahindra & Mahindra

What do you think about the Budget?

I think the part of the budget which dealt with agriculture, farmers, rural economy, infrastructure and social sector are all the right steps that we were all hoping for will come in this budget. Of course, we do not know the details yet on how the money will be spend but all the allocations, all the priorities that have been specified by the honourable finance minister is exactly in line with what our expectations were. So we are quite happy with that not just from Mahindra's view point but we also believe this is what the country needs right now in terms of getting our economic agenda moving in the right direction.

The area that I perhaps was expecting little more was in Make in India emphasis that we have. There was just a mention of it. There is some sort of fine tuning of custom duty and excise duty. I do not think that is sufficient to really put thrust on Make in India and I was expecting a little bit more on that part of it. So, that was a bit of a disappointment for me and I would have expect a little more on the financial sector. I would have expected a little more on the taxation side. Though there was a lot of effort that the FM talked about in simplifying the tax structure and removing the compliance obstacles or making it easier to comply with. All those things are fine but in terms of tax reforms, I did not see too much that would drive towards the economic growth. Clearly there is no mention of GST though we know it is not passed yet but still it would have been reassuring for the finance minister to say that the GST agenda is absolutely on track and they hope to get it done. Sooner than later would have been nice but that is how I would overall describe the budget. I think that definitely is positive again from the view point of creating passenger transport, making accessible and available passenger transport which in many routes has been a major concern and it does give a new opportunity, creates entrepreneurship, gives opportunity for youth to get into their own sort of transport business. It is also good for the industry because commercial vehicle growth should go up especially for smaller commercial vehicles because these routes opening up probably will have more of an effect on small commercial vehicles, six seater, eight seater kind of vehicle than on large buses.

Diesel tax was not unexpected. There were some sort of rumours that diesel tax is being considered, so we are not surprised by that. I do not think that we will have a significant dent on our overall sales because of this. For any tax hike, the prices and price increases will obviously have a pressure on volume but I do not expect it to have a very significant impact. The concern that I have is not so much on margin or volume because margin would not be effected in the sense that we will obviously have to pass on this increase, we will not be keeping it. When we pass it on , announcement will be made in a day or two but the concern that I see is that once again tinkering is being done with excise duty rate and every year that is a concern for the industry as every tinkering leads to discontinuity. We are hoping that the excise duties will be left alone and not touched now till the GST comes because GST will again overhaul the indirect taxes.

Disclaimer: This info has been published and collected from various public & secondary resources.