Financial Daily from THE HINDU group of publications
Wednesday, Mar 02, 2005
Industry & Economy
Budget draws positive response from chambers
Mumbai , March 1
TRADE and industry in the financial capital have welcomed the Union Budget's overall thrust to bring down customs duty, introduce VAT from April 1, maintain service tax at current levels, as well as the emphasis on developing education, healthcare, rural development and infrastructure.
The Budget proposals for the renewal of urban centres, especially infrastructure in the city as well as the proposal to convert Mumbai into a financial hub, have met with obvious cheer.
However, the tax on withdrawals of over Rs 10,000 and the `fringe benefit tax' have been strongly opposed. The tax on withdrawals was seen as an imposition on one's own resources. Also, it was expected to lead to an increase the number of transactions and cumbersome procedures for levy of the tax.
However, there is a feeling that not enough has been done for the manufacturing sector with a reduction in customs duty on capital goods being announced for just a few categories.
According to the President of the Bombay Chamber of Commerce and Industry, Mr Ashwini Kakkar, the biggest wins for the chamber were the proposals on the urban renewal mission with special mention reserved for the Mumbai metro rail, the trans harbour link and the western express sea link. The proposal to convert the financial capital into a financial hub, similar to London or Tokyo, has also enthused the chamber.
Mr Nanik Rupani, President, the Indian Merchants' Chamber, said: ``I am happy that the Finance Minister has conceded our Chambers' demands in respect of Mumbai, especially since the National Stock Exchange and the Bombay Stock Exchange ranked fourth and fifth in terms of daily trading among international securities exchanges.''
However, he added that the Budget's main thrust was at agricultural and rural development and there was very little for industry, trade and service sectors.
The Budget proposal to introduce flexibility in both statutory liquidity ratio (SLR) and cash reserve ratio (CRR) by encouraging the system of repo and reverse repo among commercial banks, were also a step in the right direction.
Mr Rupani also welcomed the stamp duty exemption for facilitating corporatisation of the major stock exchanges. Similarly, introduction of trading in "gold units," on the pattern of mutual funds units, would help infuse liquidity to gold hoarded by families across the country.
The Budget is a growth and development oriented one with special focus on the manufacturing and agriculture sectors, said Mr Sushil Jiwarajka, Chairman of the FICCI Western Regional Council.
According to Mr Jiwarajka, the Budget has attempted to simplify and reduce both direct and indirect taxes. Special sectors of manufacture such as textiles and pharmaceuticals have been given tax benefits to help them exploit their potential. However, the budget has not made any mention of disinvestments, he said.
Mr Vijay Kalantri, President, the All-India Association of Industries has welcomed the setting up of a separate fund under the National Competitiveness Council to infuse greater competitiveness in small-scale industries.
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