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January 08, 2002

'15'

FINANCE MINISTER HOLDS PRE-BUDGET CONSULTATIONS WITH THE REPRESENTATIVES OF INDUSTRIES

The Finance Minister, Shri Yashwant Sinha, today met representatives of the Indian industry, their associations and chambers of commerce as part of his pre-budget consultations with various interest groups and experts. Welcoming the representatives, the Finance Minister indicated that the economy is presently passing through a difficult situation with industrial slowdown and a great deal of uncertainty in global economic outlook. Although agriculture and some of the service sectors are doing well, the performance of industry and infrastructure is much below our expectations. There is also a need to accelerate the process of second generation economic reforms which were highlighted in the Budget for the current year.

The Finance Minister mentioned his Budget announcement to bring down our customs tariff rate to 20 percent in three years and to continue the trends in rationalisation and simplification in tax rates and reduction in interest rates over time. He also indicated that the government plans to dismantle the administered pricing mechanism of petroleum products with effect from April 2002 as announced in the budget for the current year.

Finance Minister expressed the hope that the meeting will provide an opportunity for fruitful Industry Government consultations to put forward a growth oriented and investment friendly budget for the coming year. He sought concrete suggestions for further liberalising the economy and for revival of industrial and overall growth.

The participants were appreciative of the measures announced in the Budget. In a wide-ranging discussion that followed, the representatives made a number of suggestions for the forthcoming budget. Major suggestions made by the participants included the following:

Reintroduction of investment allowance at the rate of 25 per cent for five years, which will provide a boost to the manufacturing sector.
Enhancing further outlays on rural development and doubling of expenditure in irrigation projects in next three years. Also other measures for stimulating rural demand.
Cut down subsidy wherever possible.
Post-APM subsidies on Kerosene Oil and LPG should be targeted and finite.
Liberalisation of agricultural marketing and movements of agricultural products and to treat India as a common market for agricultural goods. Farmers may be given freedom of choice in marketing and distribution.
Agro-processing zones may be encouraged.
Review of food legislation and repeal of Essential Commodities Act.
Infrastructure status may be given for investment in Integrated Townships.
Entertainment and media industry may be treated at par with IT industry as regards fiscal concessions.
Corporate restructuring through mergers and demergers must be permitted for non-industrial companies also through extension of fiscal concessions.
Tax exemptions may be provided for expenditure under the voluntary retirement scheme and provisioning for non-performing assets.
Expedite introduction of VAT at the state level.
Persuade states to reduce stamp duties and to have credible agricultural reforms.
Enhance investment on infrastructure particularly on power and roads, sea ports and airports.
Expedite disinvestment process.
Broadening the tax base by bringing all services under the tax net as recommended by various expert groups.
Expedite liberalisation of labour laws as announced in the current year's budget.
Further reduction of interest rates by indexing interest rates to the rate of inflation.
Withdrawal of MAT.
Introduction of credit cards for the SSI units as in the case of agriculturists.
Reduction of excise duties on demand-elastic goods.
Allowing 100% foreign direct investment in integrated township development.
Extending period for the phasing out of tax exemption for the exports.
Expediting refunds of duties under the duty drawback scheme.
Review of policies for all administered prices such as fertilisers.
Withdrawal of price and purchase preference policies for public sector enterprises.
Exporting major portion of stocks of foodgrains and extending food for works programmes to deplete existing stock of foodgrains.
Full exemption of interest and principal repayments for housing loans without ant limits.
Special thrust for tourism and entertainment industries.
Thrust on development of organic food for niche markets.
Motor Vehicles Act should be amended for better tax compliance.
Dividend tax should be waived for infrastructure companies.
No excise for inputs for road construction.
Single custom duty rate is not a desirable objective.
Reduction in peak rates should not be rushed.
Phase out end-use exemptions.
Depreciation on vehicles owned by individuals and scrapping of 15 year old vehicles.
Incentives for R&D investment.

Among the participants in the meeting were heads of industry associations and chambers of commerce like the Confederation of Indian Industries (CII), ASSOCHAM, Federation of Indian Chambers of Commerce and Industries (FICCI), Federation of Indian Exports Organisation (FIEO), Confederation of Real Estate Developers (CREDAI), Public sector undertakings like Steel Authority of India Ltd. (SAIL), Bharat Heavy Electricals Ltd. (BHEL), Maruti Udyog Ltd. (MUL), Standing Committee of Public Enterprises (SCOPE) and prominent industrialists like Shri Sanjiv Goenka, Shri Mukesh D. Ambani, Shri Nusli Wadia, Shri Ratan Tata, Shri Rahul Bajaj, Shri Ashwin Dani, Shri Ajay G. Piramal, Shri M.S. Banga, Shri V.N. Dhoot, Shri Suresh Neotia.

The meeting was also attended by Minister of State for Expenditure, Banking and Insurance, Minister of State for Revenue, Secretary (Economic Affairs), Secretary (Revenue), Secretary (Expenditure), Adviser to the Finance Minister and Chief Economic Adviser, Secretary (Industrial Policy and Planning) and other senior officers of the Finance Ministry and concerned Ministries.