ALL ATTENTION: CII representatives watching budget presentation by Finance Minister P. Chidambaram on Tuesday in Hyderabad.

HYDERABAD: The Central Government's budget for 2006-07 introduced by Union Finance Minister P. Chidambaram in Parliament on Tuesday evoked mixed response from the industry.

The Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, Federation of Andhra Pradesh Chambers of Commerce and Industry and others welcomed the decision to curtail fiscal deficit to less than 4 per cent and cut in excise duties on a wide range of items. The clear signal sent out by Mr. Chidambaram on introduction of Goods and Services Tax by 2010 would help in integrating the economy and making the country a single market.

FII limits

They also welcomed the move for upward revision of FII investment limits in corporate debt and Government securities. While the railway budget had ignored the State, it was heartening that the Finance Minister made a mention of Hyderabad metro rail project in his budget speech.

They, however, expressed concern that the Government could not take a decision on lowering the central sales tax to 2 per cent and abolition of the Fringe Benefit Tax. The absence of a clear road map for growth of the small and medium enterprises sector was another area of concern.

Inflation problem

A section of the CII described the budget as a `balanced one' presented in view of the elections to five States. The CII representatives said that though the budget had promises for massive infrastructure development, the Finance Minister did not spell out the ways through which the projects would be funded. Mr. Chidambaram also did not specify the Government's plans to keep inflation in check and address the problem of unemployment.

The FICCI opined that the Finance Minister could have pursued the policy of reforms in public sector undertakings and disinvestments. In the context of the coalition Government at the Centre, the budget might have been silent on disinvestments.

In the light of the significant growth being witnessed in the economy, FAPCCI felt that the Government should have made efforts to give fillip to the growth. Though the industry was looking eagerly for announcement of labour reforms, some political compulsions might have forced the Finance Minister to hold back the proposals.

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