New Delhi: Budget proposals for fiscal 2008-09 are likely to be traditional for India Inc., since the primary challenge for the government would be to sustain the growth momentum. Respondents in an Assocham survey anticipate no significant tax cuts because they feel the FM’s top priority will be to hike revenue collections for higher budgetary allocations to sensitive sectors such as agriculture, education, health, defence and manufacturing.
In the absence of double-digit growth, which has to be achieved primarily on the strength of the manufacturing sector, it may be difficult for the economy to maintain 9%-plus growth. It is imperative, therefore, that special thrust be given to development of real sectors — agriculture and industry. Any strategy to ensure 15% growth in manufacturing sector cannot be exclusive of a strategy that involves growth of the farm sector
Concept of inclusive growth, implying greater employment opportunities for the unemployed, would be difficult to achieve in the absence of higher growth and better spread of manufacturing activities; higher the manufacturing growth, greater is its capacity to absorb surplus labour from agriculture and other land-based rural activities.
People’s budget: Most CEOs feel the man on the street will be a gainer fromthe budget. they say the FM is more likely to focus on honourng commitments for better infrastructure, higher food, fuel and fertilizer subsidies.
These findings were arrived at after a random survey was conducted by industry chamber, Assocham where 200 CEOs were polled and their opinion on Budget expectations sought.
• 85% felt that the forthcoming parliamentary and assembly elections would have not yielded sufficient influence on the FM to inspire him for creating fiscal concessions towards the corporate sector
• Aam aadmi (common man) might be a gainer but certainly not India Inc. as government would like to maintain growth inertia to honour its commitments for better infrastructure and improved agricultural conditions (hike subsidies for food, fertilizer, petroleum) by nearly 10%
• Over 90% CEOs felt that the FM would like to effect a conscious balancing act in his budget proposals to appease Indian industry and that there shall not be any additional cess levied
• 85% do not anticipate considerable fall in customs tariffs since the government would prefer to defer some of its statutory obligations towards WTO in a bid to spur revenue collections
• The expectation is that personal income tax ceiling would be raised by nearly 30,000 but those whose annual salary package exceeds Rs5 lakh, won’t find any relief in the income tax slabs as these would continued to be taxed under existing income tax slabs
• 15% CEOs maintained that the FM would not like to ignore industry’s demand for a reduced taxation structure, arguing that a fair tax structure that was put in place over the years, buoyancy in tax collection both direct and indirect is witnessed in government revenues as a result of better tax compliance and therefore there would be some legitimate cuts in the duty structure in budget 2008 – 09
• Majority CEOs have outright rejected this view and felt they do not expect the slightest reduction on excise front because FM would like to draw maximum possible taxation through excise tariff as long as a hue and cry is made out of it
• Members have urged the government to ensrue 15% manufacturing growth and to keep inflation at 5% over the next 10-15 years; also to give manufacturing industry ample incentives to enable them regulate prices by making supply side management stronger