India Inc today urged the Finance Minister to continue the stimulus packages till firm signs of economic recovery are visible, and also reducing the corporate tax rates.
"The focus of the discussion today was the continuation of the fiscal stimulus measures unless the tipping point is visible...," Ficci Secretary-General Amit Mitra told reporters after meeting Finance Minister Pranab Mukherjee here.
Besides the continuation of the stimulus measures provided to the industry to combat the impact of the global financial meltdown, the industry captains and representatives of the leading chambers like the Ficci, CII and Assocham, in their customary pre-Budget meeting with the Finance Minister also demanded a cut in the Minimum Alternate Tax (MAT).
The 2009 Budget had raised the rate of MAT to 15 per cent. The industry wants it to be lowered to at least 10 per cent in the forthcoming Budget.
Earlier in the day, Tata Group Chairman Ratan Tata said the stimulus packages provided should not be withdrawn soon. "Obviously, I have great self-interest in saying it should not be withdrawn because buoyancy in the market, which is somewhat a barometer also of the economy, has been stimulated greatly with the incentives that have been given," Tata said.
Ficci's Mitra argued that the government should withdraw stimulus gradually only after the economy shows sings of takeoff on a sustainable basis.
Assocham President Swati Piramal said: "Across-the-board all industries feel that the fiscal stimulus should continue for a while because the recovery is fragile and that it needs to be more robust especially for our export-led industries for which global recovery is slower."
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With the economy growing by 7.9 per cent in the second quarter it is feared that the government may withdraw stimulus to tame the growing fiscal deficit.
Three stimulus packages provided by the government since September 2008 mainly dealt with tax cuts and raising public expenditure. These initiatives, however, are expected to raise fiscal deficit to 6.8 per cent during current year from 6.2 per cent in 2008-09.
"While people are talking about investment plans, not enough of investment is actually happening on the ground. Therefore, investment needs to be encouraged and a suggestion was made that we should bring back investment allowances, for example," Ficci President Harsh Pati Singhania said.
CII President Veenu Srinivasan said: "GST is the most important of the reforms. We don't have a single common market, transaction costs are high, roads have barriers between every state and, therefore, for us GST is the most important (topic of discussion)."
Besides chamber presidents other noted industrialists who were present at the meeting were Anand Mahindra of the Mahindra Group, Venugopal Dhoot of Videocon Group, and Tulsi Tanti of Suzlon Energy.
Among the top industrialists who were not present at the meeting included Ratan Tata, Mukesh Ambani, Anil Ambani, and Kumar Mangalam Birla.