NEW DELHI: The Central Government, though in a mode to combat inflation, will seek to push through its budget for 2007-08 the reforms agenda, extend incentives for infrastructure growth and development, and modulate policies and taxes in a manner that would help sustain and possibly take the economy to a high growth path of 9-10 per cent.

Apart from providing impetus to manufacturing, services, IT, infrastructure, auto and related sectors, the budget is expected to reinvigorate the agriculture sector to increase its contribution to the country's GDP as also rationalise levies to further chisel the competitive edge of Indian exports.

These are the widely shared expectations of industry from Finance Minister P. Chidambaram who would be presenting the third consecutive budget of the UPA Government. The wish-lists submitted by apex chambers representing Indian industry are sector-specific, articulating each industry sector's expectations

To give a boost to agriculture so as to realise a five per cent growth from next year, the possibility of acceptance of a proposal for a two per cent cess on agricultural industrial activities is not being ruled out, as it will also give a fillip to the goal of inclusive growth.

The Finance Minister is expected to come out with measures to facilitate generation of employment opportunities through productive activities and remove the notion of jobless growth by reassuring industry of protection for its investment.

There is high expectation that the budget would provide a direction to resolve the controversy over special economic zones (SEZs) and industry is optimistic that the Government would encourage overseas acquisitions through tax incentives.

Apart from clearing the clouds of uncertainty looming large on SEZs, the Federation of Indian Chambers of Commerce and Industry (FICCI) sees the possibility of the Finance Minister providing tax benefits for SEZs, FTZs, EOUs and BPOs by way of forward movement and equip industry with a competitive edge. Also restoration of exemption of income from investment in infrastructure and other projects can unleash resources and spur investments in such future projects. This will help enhance the rate of investment from the current level of 33-34 per cent to the required rate of 39-40 per cent of the GDP to sustain the high growth rate.

The chamber has also pitched for pension reforms, permitting higher foreign equity in telecom, insurance, power, port, roads and other infrastructure sectors and creating an encouraging atmosphere for investments by individuals in long-term savings instruments suitably enhancing the threshold limit.

While anticipating some forward movements towards phasing out of the Central Sales Tax (CST) to create a common market for growth and competitiveness, industry is hopeful of suitable relief being provided on the excise and customs front. It is hopeful that there would be progress towards bringing all services under the tax net and grant of weighted deductions (in corporate tax) benefit for research and development to all sectors of the economy along with modification in fringe benefit tax provisions relating to genuine business expenses incurred on sales promotion.

There can also be some measures for phasing out cross subsidies particularly in rural transport as well as travels. Apart from other concessions, industry is hoping for some relief in relation to corporate tax, which it wants reduced to 25 per cent by removing various surcharges.

The export sector is anticipating some positive announcement in relation to introduction of the Goods and Services Tax (GST). It is expecting that necessary legislative changes required for expeditious implementation of GST and announcement of a uniform GST rate in the budget for gradual movement of duties and taxies towards it.

FIEO wishlist

GST, the Federation of Indian Export Organisations (FIEO) feels, will not only provide full rebate of duties to exporters but also usher in clean and transparent tax administration. It is optimistic that steps will be announced to streamline the procedure to pave the way for instant release of refunds due to the exporters utilising the electronic data interchange connectivity. The FIEO is alarmed over the dwindling share of agri total exports. The budget may carry measures that will push agri exports to help create employment opportunities and better returns to farmers.

The FIEO has pitched for procedural changes providing for execution of a single bond under export promotion schemes, dispensing with the requirement of separate bank accounts at each port under the duty drawback scheme and coverage of export promotion schemes under the customs "Risk Management Module and Accredited Client Programme.''

Reduction of transaction costs, better credit flow, concessions to give them a competitive edge are among the other long-standing demands of exporters who expect relief on these counts. There is an air of optimism in industry and expectations are high. How much of their expectations materialise is anybody's guess until the Finance Minister formally places his proposals before Parliament on February 28.

Printer friendly page  
Send this article to Friends by E-Mail