At the day-long interaction with the industry — the first in the series, Mukherjee proposes to have to get input for preparation of Budget 2010-11 — industry representatives urged the government to continue with the stimulus measures to sustain the growth impulses in the economy.
They also urged the finance minister to avoid any tightening of the monetary policy to contain food price inflation as it would derail the growth process and adversely impact the industrial sector.
Highlighting industry’s expectation from the forthcoming Budget FICCI President Harsh Pati Singhania suggested that the budget should provide a strategy for investment led growth and stimulate demand through fiscal measures while putting increased focus on social sectors.Pointing out that the industry is conscious of the problems of fiscal deficit industry leaders suggested that the government should pursue its focus on fiscal consolidation after the economy has recovered strongly.
Industry leaders pointed out as a result of economic slowdown there has been a decline in the corporate investment activity. “The budget should facilitate companies to retain more investible funds for modernization and expansion and for this investment allowance need to be reintroduced,” Ficci chief suggested.
Assocham President Swati Piramal also strongly advocated for continuation of stimulus package for fiscal 2010-11. The withdrawal of stimulus packages could be counter productive to ongoing recovery, she suggested
Easing I-T rates
On the tax front the industry pleaded for reduction in the controversial Minimum Alternate Tax (MAT). Ficci, in its pre-budget memorandum suggested relaxation in Income Tax rates for middle income group to boost consumption.
It wanted maximum Income Tax rate of 30 per cent should be made applicable over an income of Rs 7 lakhs which could be increased to Rs 10 lakh over the next 2 years so as to provide more income in the hands of these consumers and to be line in with practices in comparable countries. Assocham suggested that corporate tax be reduced to 25 per cent and Income Tax be curtailed to 20 per cent for SMEs from present 30 per cent.