The budget proposals announced by Finance Minister Pranab Mukherjee in his budget for 2010-11 has evoked mixed reactions from industry chambers. The Bangalore Chamber of Industry and Commerce (BCIC) has complimented the Finance Minister for accepting some of its recommendations like partial increase in the rate of Excise Duty from 8 per cent to 10 per cent and not tinkering with the rates of Service Tax.
K R Girish, president, BCIC in a statement said, “The increase in Minimum Alternate Tax Rate from 15 per cent to 18 per cent is a retrograde step. BCIC is of the view that instead of removing the surcharge altogether, the corporate sector is saddled with increased tax outlay. This would impact all corporates considering that the industry is on the path to recovery.”
The chamber also welcomed some of the measures proposed such as a significant increase in the Personal Income Tax slabs, although the chamber recommended that slab rates of tax for individuals should be linked to the cost of living index.
BCIC also welcomed the move to increase allocation for the road sector which should improve the urban-rural connectivity, thereby propelling semi-urban and rural areas in the overall economic development process, alignment of the present excise rates towards a roll out of GST and increased allocation in rural infrastructure and primary education as per the lines indicated in the Economic Survey.
However, the chamber has expressed its concern/disappointment that the finance minister did not make any specific mention to reduce Fiscal Deficit, which is estimated at 6.9 per cent. On combining the state fiscal deficit, the overall national deficit would be 10.2 per cent of the GDP and this is cause for concern, Girish said.
On the whole, the BCIC is of the view that the Finance Minister had a great opportunity being the second year of the UPA government, could have taken certain bold initiatives to augment revenues and give a fillip to growth by incentivising corporate India to invest in expanding capacity.
J Crasta, President, Federation of Karnataka Chambers of Commerce and Industry (FKCCI) said, “We are happy that a clear road map has been laid for the introduction of GST and Direct Tax Code from April 2011 which would help the industry and the trade. Facilities have been provided in the budget to help the MSME sector. For instance they have been permitted to take full credit of central excise duty paid on capital goods in a single installment in the year of the receipt and they have also been permitted to pay the central excise duty on a quarterly basis instead of every month, which is a great relief to the sector.”
The decision to continue the 2 per cent interest subvention on pre-shipment credit for another year and the increase in the audit from Rs 40 lakh to 60 lakh for small scale sector are welcome steps, he said.
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M C Dinesh, President, Karnataka Small Scale Industries Association (Kassia) said the increase in the allocation for development of micro and small scale sector from Rs 1,794 crore to Rs 2,400 crore is a welcome step.
The proposal to issue banking license to private companies will augment the flow of credit particularly in the SME sector, which is severely constrained by inadequate finance for all round development, he said.