The Hindu : Business : Industry, a large number of apex chambers cautiously optimistic

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Thursday, Feb 21, 2008
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Industry, a large number of apex chambers cautiously optimistic

Special Correspondent

NEW DELHI: For a change, India Inc is rather sanguine in its expectations from the Union Budge for 2008-09. They are not expecting anything spectacular this time round from the Finance Minister, P. Chidambaram, when he rises on the month-end to propose a balance-sheet for the next fiscal. All the same, industry and trade are not entirely sceptic either.

Aware as they are of the compulsions of Mr. Chidambaram, in view of the approaching State assembly elections and the Lok Sabha elections due next year, unless held earlier, the apex industry chambers and trade bodies are still hopeful of their immediate concerns being taken care of for sustaining and pushing the high economic growth. However, what is worrying them is the apprehension as to whether the sharp focus on the common man in the Budget does not end up hurting them badly.

Of course, there is unanimity that the Finance Minister will tackle inflation through the budgetary measure. How he does it is the subject matter of speculation.

Halting industry slowdown

Like the Federation of Indian Chambers of Commerce and Industries (FICCI), a large number of apex chambers and trade bodies are anticipating measures to allay their fears about the slowdown that is not pervasive as yet but has affected some sectors.

For waging this war against the feared slowdown, industry bodies have pitched for steps to stimulate consumption and demand. The measurers sought by the manufacturing and other sectors include cuts in excise duties on consumer products, interest rates and corporate tax rate besides appropriate raw material policies and improved regulatory environment to check the slowdown in the sector.

Apart from tackling the problems arising from hardening of interests and of the rupee becoming strong, the budget needs to provide relief to textile exporters by exempting service tax and neutralising the impact of State levies.

Exporters, reeling under the impact of strengthening of the rupee against the dollar, are expected to receive sure attention of the Finance Minister.

India Inc is also optimistic about some forward movement towards transforming India into a common economic market by implementing General Sales Tax (GST) at the earliest so that cascading effect of taxes is removed from indigenous manufacturing and services cost, transaction cost is reduced and trade and industry grow faster by taking advantage of the scale of economy and efficient supply chain.

As a step in this direction, the Associated Chambers of Commerce and Industry of India (Assocham) has sought reduction in the CST rate from 3 per cent to 2 per cent and integration of excise and service taxes with Central GST during 2008-09 besides bringing sugar and textiles under VAT instead of the present special duty regime to VAT.

Agriculture Zone

Even as two-thirds of the Indian workforce earn their livelihood directly or indirectly through agriculture but are not benefited by higher gross domestic product (GDP) growth of 9 per cent due the low growth rate of 2-3 per cent in agriculture, the industry bodies have sought creation of Agriculture Economic Zone (AEZ) on the line of SEZ for realisation of the agriculture growth by at least 4 per cent on a sustainable basis. For this, creation of a separate fund for financing of AEZ as well as direct financing on concessional terms through National Bank for Agriculture and Rural Development (Nabard) have been commended.

Industry and trade have gone through the customary motions of submitting pre-budget memoranda, interacting with the Finance Minister and senior officials of his Ministry and submitting their wish lists even sector-wise. How much of these wishes will get answered is the million dollar question. Anyway, India Inc is not ready to hazard any guesses.

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