Financial Daily from THE HINDU group of publications
Friday, Jul 09, 2004
Industry & Economy
Mixed response from India Inc
(From left) Dr Naresh Trehan, Executive Director, Escorts Heart Institute & Research Centre; Mr Sunil Kant Munjal, President, CII; Mr R. Seshasayee, Managing Director, Ashok Leyland; Mr Sunil Bharti Mittal, Chairman, Bharti Enterprises; and Mr Phiroj Adi Vandrewala, Executive Vice-President, Tata Consultancy Services, at an interaction on the Union Budget organised by the CII in the Capital on Thursday. Kamal Narang
New Delhi , July 8
THE Union Budget Proposal 2004-05 has evoked a mixed response from India Inc.
While complimenting the Finance Minister, Mr P. Chidambaram, for unveiling a blueprint for the overall development of the country within the framework of the national common minimum programme (CMP), it expressed concern on the proposal to levy a cess, which in effect is a surcharge on existing tax.
Mr Y.K. Modi, President of FICCI, while agreeing that the education sector needed more money, said that raising the tax rate in effect was not the appropriate way to increase revenue.
"The Government should instead focus on enlarging the tax base, as this is the more appropriate measure. The need of the hour is to improve the delivery system of services such as education to the rural masses."
Referring to the changes in the tax proposals, Mr Modi welcomed the simplification of capital gains tax.
The changes would place Indian investors on the same footing as overseas investors in the Indian stock market.
Mr Modi, however, expressed concern over the quantum of the turnover tax that appears "incredibly high". FICCI said that turnover tax warranted a relook.
The President of Assocham, Mr Mahendra K. Sanghi, said that the existing corporate tax ceiling should have been brought down. He expressed unhappiness over the increase in the rate of service tax from eight per cent to 10 per cent.
He added that not much has been done for the export and the manufacturing sectors to spur growth.
Mr Ravi Wig, President, PHDCCI, said that the Budget could have introduced second-generation reforms, especially at a time when the economy was on an upswing.
"Cess on indirect taxes should have been avoided as the manufacturing sector is already taxed heavily when compared to international counterparts."
The levy of cess on indirect taxes of two per cent will effectively increase the price of the products, which will have to be borne by the consumer, Mr Wig said.
Mr Sunil Kant Munjal, President, CII, said that the Budget would drive and encourage investment that will benefit the corporate sector as a whole.
In agriculture, CII welcomed the clear targets. The important signals, according to the chamber, were doubling of agricultural credit, strengthening co-operative banks, encouraging crop diversification, and making India a single market.
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