Budget balances growth objectives within current political compulsions - FICCI President
NEW DELHI, February 29, 2008. FICCI President, Mr. Rajeev Chandrasekhar said that this is a balanced budget that has taken care of both the growth of the economy and the political compulsions of out time. He added, “I am convinced that the budget will continue to spur growth and FICCI hopes that the Prime Minister’s statement at FICCI’s 80th AGM that 9% growth is achievable holds true.”
FICCI had recommended that for the common men and women of the country the income tax exemption limit be enhanced from Rs. 1.1 lakh to Rs. 1.5 lakh. The Finance Minister has announced this and this will now give more purchasing power into the hands of people and boost consumption.
Industry had also requested that the government take measures to address the cascading affect of the Dividend Distribution Tax. In the budget, the Finance Minister has taken up this matter and the issue has been partially addressed. FICCI hopes that as we go ahead further modifications will be made to completely waive the cascading affect of DDT on multi-layered corporates.
The Finance Minster’s major step in promoting hospitals and the healthcare sector in tier 2 and tier 3 cities of the country is also a very positive move. FICCI had urged the government to give a boost to the healthcare sector and now hopes that a further push will be given by granting ‘infrastructure status’ to the healthcare sector.
One of the major problems being faced by industry today is the severe skill shortage across sectors and at all levels. In this context FICCI feels that the Finance Ministers announcement of setting up a non-profit corporation for promoting skill development with an outlay of Rs 15, 000 crores is a fresh, new idea whose time had come.
Further, the Finance Minister in this budget has kept the peak rate of customs duty on non-agricultural products unchanged. This would help Indian industry in the face of the appreciating Rupee. FICCI also welcomes the decision to lower excise duties on a wide range of products and the across-the-board reduction in cenvat rate from 16% to 14% as this will give a boost to the manufacturing sector.
FICCI members from the pharma industry have expressed satisfaction with the government’s decision to extend the tax benefit from in-house research to outsourced research.
The massive loan waiver, to the tune of Rs. 60,000 crores, announced for the farmers will serve its purpose only if parallel reforms are undertaken in the agriculture sector. Increasing agricultural productivity, strengthening agri-marketing infrastructure and rejuvenating extension services are essential to ensure that the farmers do not fall back into another debt trap in a few year’s time.
FICCI has also welcomed the announcement on strengthening and deepening of the corporate bond markets. This would be particularly helpful for mobilizing funds for large infrastructure projects.
The removal of Banking Cash Transaction Tax as well as further modification of the Fringe Benefit Tax are also a welcome steps.
Finally, the announcement of a tax rebate on contribution by the youth for health insurance for their parents is a progressive move and is in line with FICCI’s recommendation.
Union Budget