NEW DELHI: Two auto companies on Friday came out with divergent views over withdrawal of the government stimulus package with Maruti Suzuki seems to be prepared for a partial rollback, while Mahindra and Mahindra (M&M) opposing any such measure.
RC Bhargava, chairman of Maruti Suzuki, said while the stimulus package had helped the auto industry return to positive numbers, the rising fiscal deficit — an offshoot of lost revenues of the government — is a cause of concern. The rising deficit, he said, could play spoilsport as it could result in higher inflation and even firmer interest rates, both of which have the potential to hit demand.
Bhargava though admitted that a rollback would result in higher prices of vehicles and could impact the sales momentum temporarily. "It would affect sales for a short term. But experience shows that people gradually learn to live up to new set up."
However, M&M MD Anand Mahindra was against any such move. "I think we have to be careful over withdrawal of the package. The stimulus package in India was not a very overwhelmingly large one like in China or in the US. It is a very very measured package," he said, adding that it should be continued. "We have to be very cautious."
Car sales have been going strong since the government's fiscal stimulus package that included lower manufacturing duty as well as RBI's easier interest rate regime.
TOI
RC Bhargava, chairman of Maruti Suzuki, said while the stimulus package had helped the auto industry return to positive numbers, the rising fiscal deficit — an offshoot of lost revenues of the government — is a cause of concern. The rising deficit, he said, could play spoilsport as it could result in higher inflation and even firmer interest rates, both of which have the potential to hit demand.
Bhargava though admitted that a rollback would result in higher prices of vehicles and could impact the sales momentum temporarily. "It would affect sales for a short term. But experience shows that people gradually learn to live up to new set up."
However, M&M MD Anand Mahindra was against any such move. "I think we have to be careful over withdrawal of the package. The stimulus package in India was not a very overwhelmingly large one like in China or in the US. It is a very very measured package," he said, adding that it should be continued. "We have to be very cautious."
Car sales have been going strong since the government's fiscal stimulus package that included lower manufacturing duty as well as RBI's easier interest rate regime.
TOI
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