NEW DELHI: With Finance Minister P. Chidambaram scheduled to present the United Progressive Alliance Government's third consecutive budget on February 28, the mood in industry is upbeat. Even as they keep their fingers crossed on the steps he will take to provide an impetus to the economy and prepare it for a larger global role, corporates are hoping for substantial relief.

Although companies have presented their wish lists and interacted with the Minister, none is prepared to hazard a guess about the measures he will announce. Yet their expectations are high.

Fresh policy initiatives

There are valid reasons for this optimism. They expect fresh policy initiatives to help to sustain the present gross domestic product (GDP) growth rate and even achieve eight per cent, besides making India globally competitive on the export front.

Industry expects some relief in direct and indirect taxes. Further rationalisation and reduction of the customs duty to bring it closer to that of East Asian countries, and some relief in excise and special excise duty are anticipated. Mr. Chidambaram gave some hints in this regard in his last budget speech.

Education cess

Although industry is keen on the National Calamity Contingency Duty, the education cess and similar levies going, it is not hopeful. At best, it feels, some adjustments may be made.

Corporate circles are hopeful of a forward movement towards effective enforcement of the Value-Added Tax (VAT) regime to facilitate seamless movement of goods. However, there is scepticism of how far the Government will go. Under an ideal VAT system, central sales tax, octroi, entry tax and similar levies should have no place.

The wish list of apex industry chambers and trade bodies is quite long. Apart from a host of concessions sought, the fringe benefits tax (FBT) appears their major concern. It is contended that this levy is not there in any ASEAN country and has adverse implications for global competitiveness. Industry is hopeful of some positive outcome even as it strongly feels that business expenses that clearly have no employee benefits should not be subject to the FBT invoking deeming provisions.

Mr. Chidambaram may be favourably disposed towards industry's demands for extension of the sunset clause under income-tax laws to special economic zones, concessions in relation to infrastructure and rural development and levies on banking cash transaction, securities transaction, dividend distribution and minimum alternative tax.

Private sector investment

Where industry is confident is that infrastructure, manufacturing, agriculture, ITeS, services, food processing and small scale industries, which have employment potential and are capable of considerable contribution to the GDP, will receive special attention.

In infrastructure, the Railways, highways and ports are likely to get a big push.

In view of resource constraints, the emphasis, according to industrial circles, is likely to be on public-private participation to make projects attractive to the private sector.

Social sectors

The social sectors, which have a bearing on economic growth and have potential for employment creation, are also likely to get favourable exposure.

Higher budgetary support is likely for rural roads, electrification, non-conventional energy and drinking water.

Economic reforms will be part of the Minister's agenda. While financial sector reforms will receive a push, he may not do much on labour reforms. But the possibility of some initiative towards liberalisation of labour norms for SEZs and export-oriented units is not ruled out.

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