India Inc feels govt's pain

India Inc won't seek direct stimulus in the Budget to perk up moderating economic growth, considering the government's tight fiscal situation, but wants finance minister Pranab Mukherjee to propel investments through specific measures.

Industry chambers want the government to introduce the concept of investment allowance, increase the tax deduction rate for specific investments, give incentives to infrastructure, besides research and development.

India Inc was to meet Mukherjee on January 13 for pre-Budget consultations, but the meeting has been put off to the month-end.

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With the economy facing low demand, representatives of India Inc demand personal income-tax slabs be widened. Once consumers have more money in their pockets, their confidence will increase, and they will start spending again, thereby increasing demand. As the government is in a difficult situation as far as revenue is concerned, the chambers suggest the direct tax base be widened.

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The Confederation of Indian Industry (CII) refrains itself from asking the government to cut excise duty, given its high fiscal deficit. As part of a stimulus to the industry facing headwinds of the last global financial crisis, the government had cut excise duty by six percentage points and services tax by two percentage points in late 2008 and 2009. Later, it raised excise duty by two percentage points, when the economic growth showed signs of a recovery.

CII does not want Mukherjee to raise excise duty and service tax or reduce customs duty, which would further hurt the domestic industry.

To step up infrastructure development, it advocates initiatives such as adopting a common definition of infrastructure, setting up an effective dispute resolution mechanism, boosting power generation, smoothening coal supply and enhancing infrastructural financing options.

The approach paper to the 12th Five-Year Plan, which will begin from the next financial year, has talked about nine per cent growth a year on an average. For that, the Planning Commission has envisaged a trillion dollar investment in infrastructure between 2012-13 and 2016-17, and expects half of the money to come from the private sector.

To garner more revenue and contain expenditure, CII favours a five-year road map for disinvestment in public sector units and reduction in the subsidy bill. It also calls for facilitating clearance of at least a fourth of Rs 3 lakh crore revenue locked up in disputes and litigation.

The Federation of Indian Chambers of Commerce and Industry (Ficci) wants the government to encourage consumption spending by leaving more money in the hands of consumers. "The peak rate of 30 per cent for individuals be made applicable over an income of Rs 10 lakh," it said. Currently, 30 per cent income-tax is imposed on annual income above Rs 8 lakh.

Ficci advocates tax holiday in healthcare for 10 consecutive assessment years in any of the initial 15 years, to attract large-scale private investments.

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The PHD Chamber of Commerce and Industry expects a Budget which would pave the way for a return to over eight per cent growth in 2012-13 through effective policy interventions and reform initiatives.

It wants the government to cut the corporate tax rate to 25 per cent, from 30 per cent, and expedite the process of unveiling infrastructure debt fund to meet funding requirements.

It also demands sops for the micro, small and medium enterprises sector, like easy credit availability at two per cent lower than the base rate norm of banks. Economic growth moderated to 7.3 per cent in the first half and none expects it to go beyond eight per cent this financial year, against 8.5 per cent in 2010-11.