Front Page
No new ideas for budget from corporate sector
By Alok Mukherjee
NEW DELHI, JAN. 27. Along with the Union Finance Ministry, corporate India too seems to have run out of ideas for the next budget.
Though most of the chambers have submitted glossy memoranda to the Finance Minister, Yashwant Sinha, the bulky documents in effect do not contain any major initiatives for reviving the economy. On the contrary, the two major demands that seem to top the charts is reintroduction of investment allowance to revive manufacturing and for removal of the minimum alternative tax (MAT) and these two measures are being projected as the most important steps which would revive the `spirit of investments.'
The Finance Ministry is, however, sceptical about the industry over-pitching any one single measure as a panacea for economic ills since the experience in the past has been to the contrary. Ministry officials point out that some years back, Indian industry had made out a case that doing away with the double taxation of dividend would see the stock markets zoom. Another measure suggested vigorously was to permit inter- corporate investments and when the Government accepted both these demands, the sensex failed to go up significantly.
Similar lobbying was undertaken to allow companies to buy back their shares and it was made out that the corporate sector would be able to show much better results once this measure was allowed. While nothing of the sort that was projected happened, industry soon started the demand for reduction in the lock-in period for reissuing shares once a company bought back its own shares. This too was conceded by the Government.
Surprisingly, corporate India has also suggested to the Finance Minister that he should immediately undertake reforms in the financial sector, particularly the banking sector, since it was directly under the Finance Ministry. Here, the suggestion is to urgently reduce the huge non-performing assets (NPAs) or bad loans of the banks and financial institutions by making adequate `provisioning' which simply means that these institutions or the Government should provide a bail-out package to wipe out these bad loans. While making this suggestion, most of the chambers have conveniently glossed over the fact that the majority of the NPAs are accounted for by the Indian industry.
Most of the other suggestions to Mr. Sinha relate to procedural matters such as doing away with or amending some sections of various direct and indirect tax laws.
Other recommendations pertain to politically difficult decisions such as imposing tax on agriculture income or reducing subsidies and Government staff.
Send this article to Friends by
E-Mail
Front Page
|
