Date:02/03/2006 URL: http://www.thehindubusinessline.com/2006/03/02/stories/2006030202170500.htm

Back Provisions will hit markets: IMC

Our Bureau

Mumbai , March 1

The Union Budget has little to offer for the development of the infrastructure sector, which needs to be given priority if India is to achieve the targeted 10 per cent GDP growth in the near future, said Mr Rajesh Kapadia, President, Indian Merchants' Chamber (IMC) in a release issued to the media.

"The so-called improvement in the fiscal situation was primarily due to a high GDP growth of 8.1 per cent and not because of any concrete step taken by the Government," he said.

Mr Kapadia said it was apparent from the Finance Minister's speech that the markets will be hit significantly by the many hurtful provisions in respect of levy of book profits, long-term capital gains increase in securities, transaction tax and enhancement of service tax rate.

On the positive side, IMC appreciated the Government's continuing stress on the rural and agricultural sector. This augurs well in the long term, as it would increase rural demand for industrial products, he said.

The All India Association of Industries in its release said the Budget had let down small-scale industries by not increasing excise exemption from Rs 1 crore to Rs 2 crore and the turnover limit from Rs 4 crore to Rs 10 crore. The increase in service tax from 10 per cent to 20 per cent will have an inflationary and cascading effect on the economy, the release said.