JOIN USScripting strategy for investment-led growth and stimulating demand through fiscal measures were the two key takeaways by the India Inc, whose pre-budget brainstorming with Finance Minister Pranab Mukherjee on Friday was held in the backdrop of the on-going economic slowdown, rapidly declining industrial growth and weak investor sentiment.
While most of them were in favour of reduction in interest rates by at least 50 basis points more to give a positive signal to market, industry and corporate world, the Federation of Indian Exporters Organisation (FIEO) suggested capping interest rate for MSME sector at 7 per cent. Suggestions were also made to widen service tax base with a negative list and to exempt infrastructure sector companies and SEZ units from minimum alternate tax.
The industry captains faster disinvestment and tax reforms to lower the fiscal deficit in the coming year. Tata Steel MD and CII President B Muthuraman suggested that the government should aim at mopping Rs 4000 crore through disinvestment of state-run companies to lower its fiscal deficit. “We have asked for 2-3 percentage point reduction in the corporate tax rate and 1-2percentage point cut in excise duties,” said Videocon Industries Chairman Venugopal Dhoot, who is also a member of Assocham. Both Assocham and Ficci pitched for restoration of investment allowance as deduction from profit to the extent of new investment in plant and machinery.
“The rate of depreciation on plant and machinery should be restored to 25 per cent from15 per cent currently. The increase in rate of depreciation in long run is revenue-neutral as the total amount cannot exceed the cost of assets,” Dhoot said. The India Inc also asked the finance minister to do away with dividend distribution tax and the capital gains tax for helping Indian companies to repatriate income from their overseas arms.