Due to political compulsions and the current slowdown in the economy, the finance minister had very limited options to meet the expectations of the industry and manage the growing subsidies burden.
The Union Budget for 2012-13 balances scarce resources and expands the tax net to address the growing fiscal deficit beyond five per cent, which perhaps may not go well with foreign investors. The government’s focus on agriculture and rural development continues to hog major provisions of the Budget, with sizeable relief for the development of small and medium enterprises through the establishment of a venture capital fund. However, any major relief for the industry continues to elude us.
Subsidy deliveries through direct transfer to bank accounts would eliminate leakages. Increased external commercial borrowings for a larger number of sectors would provide funds for the development of infrastructure sectors like civil aviation and affordable housing.
The increase in service tax from 10 to 12 per cent, with more services under the net has not been taken very positively by the industry.
Rajkumar Dhoot President, Associated Chambers of Commerce and Industry of India
