India Inc to meet FM for pre-Budget talks today

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SME Times News Bureau | 05 Jan, 2010
Finance Minister Pranab Mukherjee will meet industry leaders on Tuesday in customary pre-budget consultations amid concerns of government contemplating to withdraw stimulus given to the industry to combat the impact of global financial meltdown.

The meeting, aimed at firming up proposals for the 2010-11 Budget, will be attended by representatives of three apex chambers — the Confederation of Indian Industries (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of Commerce and Industry of India (ASSOCHAM) — and other industrialists.

With the economic growth rising to 7.9% in the second quarter (July-September 2009-10), the industry fears that the government may withdraw the stimulus in the next Budget to be unveiled in February.

The government had injected since September 2008 three stimulus packages amounting to Rs 2,22,000 crore to propel economic growth which were in tandem with the measures taken by the Reserve Bank of India to make available more liquidity to the cash-starved industry.

Largely helped by the stimulus, the industrial growth accelerated back to over 10 percent for the month of October.

Recently, Mukherjee had said that the government was unlikely to withdraw the stimulus packages hastily as domestic firms would be hit in case the global economy collapses.

But at the same time, the Finance Minister had also said that it was impossible to sustain high fiscal deficit for long.

The industry leaders are also likely to press for continuation of the soft interest rates regime despite food inflation almost touching 20 percent. They argue that food inflation is a seasonal phenomenon and not related to interest rates.

The issues concerning implementation of the Direct Taxes Code (DTC) are also likely to figure prominently. The industry has specifically objected to the DTC proposal of levying the Minimum Alternate Tax (MAT) on gross assets instead of book profit.

At present, companies pay 15% MAT on book profits. As part of the customary exercise to elicit the views of different interest groups on the Budget, the Finance Minister will also be meeting economists, agriculturists, consumer activists and trade unions.