Karnataka Budget: Industry finds lack of direction in power reforms

The state budget presented by DyCM and finance minister B S Yediyurappa on Monday has got accolades from industry bodies in the state. Welcoming the budget announcements, the Bangalore Chamber of Industry and Commerce (BCIC) has said that the finance minister has kept the overall development of Karnataka in perspective and has ensured he got his basics right.

"BCIC welcomes his initiatives towards agriculture, education, women and girl child's development. The allocation of Rs 212.37 crore for the development of Bangalore, Mangalore and Hubli Airports along with other cities like Shimoga and Karwar and the Bangalore Metro Rail getting a priority will help attract investments," BCIC chairman Anant R Koppar said in a statement. "We also welcome the single unified e-procurement platform that has been planned as part of the fiscal reforms," he added.

The BCIC has however expressed disappointment with the Budget not touching upon some crucial aspects like power reforms, infrastructure and development of tier II cities. "The finance minister's jugglery in the tax structure should have been more specific rather than a generalised tax change on commodities. We need to read the fine print to see the actual impact and implications on each of the commodities," Koppar added.

He also expressed shock at the lack of a mention of SEZs in the budget speech. "This should be a priority to attract investments and accelerate further economic growth in the state and ease the pressure on Bangalore," he pointed out.

The industry body has expressed hope that the allocations of Rs 50 lakh for roads in every legislative constituency is well utilised. This apart, the exemption of entry tax on crude oil used in the manufacture of petroleum products should make a positive impact on the export of these petroleum products.

About the reduction of the stamp duty by 0.5 per cent and the proposal to revise guideline value, BCIC has expressed fear that this will encourage evasion.

The Federation of Karnataka Chamber of Commerce and Industry (FKCCI), another association of industries in the state, has expressed satisfaction that the state Budget for 2006-07 fiscal has given due emphasis to the agriculture and horticulture sectors and for the upliftment of the backward classes and minorities.

"The Budget has addressed the vision of President of India, with the implementation of PURA (Providing Urban amenities in Rural Areas) scheme and allocation of financial outlay for jetropha and honge cultivation as alternative bio fuel," it said in a release.

Touching on some of the positive points in the budget, FKCCI has said that apart from the increased allocation on primary education, irrigation and public works, the finance minister has also announced special schemes for rural development. However, the tourism sector had not been given due consideration, even though it was identified by President A P J Abdul Kalam as an important sector, said the release.

FKCCI has also expressed satisfaction over the increased focus on agriculture, urban development, Metro Rail Project and full budgetary support for Bangalore International Airport.

Welcoming the reduction to 4 per cent VAT for the canteen stores department with respect to daily necessity goods, FKCCI has expressed displeasure over the non-inclusion of all industrial inputs and capital goods under 4 per cent VAT, which was a long-standing demand of the industries in the state.

Meanwhile, the Bangalore Wholesale Food Grains & Pulses Merchants' Association has expressed its thanks to the finance minister for extending VAT exemption on rice, wheat and pulses for six months. "We request you to continue the exemption for a term of one year since rice is the staple food of the people in the state and pulses, until the CST is phased out," an official release said.