New Delhi: Apex industry chamber Ficci on Sunday decried a 3% hike in the Minimum Alternate Tax in Budget 2011, saying it over weighed the concessions in the corporate tax and the government should look at reducing the peak rate to 25.6% from over 30% now.
“...as the rates come down, the revenue growth is much sharper... the world around, the figure is 25.6%. India should start considering to look at the same tax rate over a period of time... It would be more in line with international standards,” Ficci president Rajan Mittal said.
On the hike in MAT rates, he said, “They (the government) have reduced the surcharge (on corporate tax) but increased MAT. It is a disappointment for the industry”.
The Budget proposals announced last month, raised MAT to 18% from 15%, and cut surcharge on corporate tax to 7.5% from 10%.
Mittal said the reduction was “not at all” beneficial as the government had reduced surcharge, but hiked the MAT rate.
Pointing to several other areas that needed push for better economic growth, the new Ficci president said the Budget could have hiked the FDI limit in the insurance sector to 49% from 26% at present and opened up the multi-brand retail sector.
Mittal added that the government could have also extended more tax benefits for investments in sectors like agriculture, food processing and cold chains.
He said, however, that industry expects a more liberalised regime and better growth in 2010-11.
Mittal said countries worldwide are still under pressure and are facing a lot of challenges to grow.
“...in the world arena, where we are today sitting and seeing countries still under stress...if we end up growing at 7.2% this year, it would be remarkable,” he said.
Prime Minister Manmohan Singh said in Parliament last Friday that it was important for the economy to get back to the growth rate of 9% or more.
Mittal said, however, that for clocking higher growth, all stakeholders must ‘co-create India´, with special focus on developing infrastructure more aggressively and stressing on areas like education, healthcare and skill development.
He pointed specifically to roads and power sector development. “Without these elements, it will be difficult for us to see the type of growth we are looking at.”
Mittal said the public-private-partnership for developing infrastructure “should be much enhanced”.
Besides, he said India’s economic growth would much depend on investments in education and infrastructure.
For that, he said industry bodies like Ficci should play a proactive role and engage with the government.
“Why should I not be more concerned about education. Why should I not be more concerned about the health services, which is actually going to be the challenge and bane for the country’s growth,” Mittal said.