New Delhi: The Confederation of Indian Industry (CII) on Tuesday called for the government to provide tax incentives on agricultural activities in the forthcoming Budget to encourage private participation and adoption of new technologies in the sector.
“CII has recommended encouraging private sector participation through various tax measures (in agriculture),” the industry chamber said in a statement.
It said that additional tax incentives need to be given on expenses incurred on new technology and inputs.
CII also said the government should incentivise best crop raising practices, soil testing, residue analysis and diagnostics.
According to the government’s advance estimates, the output of the agriculture and allied sectors is likely to grow by 5.4% in 2010-11, compared to just 0.4% in 2009-10.
Experts said growth of the sector needs to be encouraged through calibrated Budget measures, as agriculture in India is primarily monsoon-dependent and any minor changes in rainfall patterns affect productivity and quality.
In this regard, deficient rainfall had reduced the farm sector growth to mere 0.4% in 2009-10, which assumes significance in the context of the prevailing skyrocketing food inflation levels in the country.
CII hopes that the Union Budget presented on 28 February will help reverse the declining investment trend in the infrastructure sector by introducing certain innovative fiscal measures.
“Emerging challenges such as rising input costs and interest rates amid still subdued global demand will have to be dealt with,” CII director-general Chandrajit Banerjee said.
In this regard, the chamber said concrete steps need to be taken to promote investment, given that recent data shows the investment growth rate slowed from 38.1% in 2007-08 to 36.5% in 2009-10.
The industry chamber also asked the government to reduce the tax liabilities of infrastructure companies to motivate them to make larger investments.
India needs a whopping %1 trillion investment in the infrastructure sector in the 12th Five-Year Plan (2012-17), of which it expects 50% to come from the private sector.