The Hindu : Karnataka / Bangalore News : Experts worried about fiscal deficit

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Friday, Jul 10, 2009
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Karnataka

Karnataka - Bangalore

Experts worried about fiscal deficit

Special Correspondent

BANGALORE: Speakers at a panel discussion on the Union Budget, organised here on Wednesday by the Indo Italian Chamber of Commerce and Industry, asked the Government to give priority to bridging the deficit, start infrastructure and housing projects without delay and create confidence among consumers.

John Powath, Partner, international accountants, Ernst& Young, said: “There was a big build-up to the budget with high expectations from key industries. The budget has spelt out certain key objectives of the government like creating 12 million jobs, high investment on infrastructure and the aim of reducing the numbers of those below the poverty line by 50 per cent by 2014.”

Disinvestment

There were pitfalls: cutting taxes may not improve collections.

The time was not right for disinvestment of public sector companies, because of low equity valuations in markets which were not yet stable, he said.

Federation of Karnataka Chambers of Commerce and Industry president J. Crasta said there was little for small industries and exporters to feel happy about.

“What we have is a `psychological recession’ with consumers reluctant to spend and this has affected trade. The real recession in western countries has hit exporters, especially those in Karnataka.”

Aroon Raman, Managing Director, Raman FibreSciences Ltd., said there were no major shifts in economic policy in any of the post-liberalisation budgets.

With adequate liquidity having been created, it was time for banks to lend more liberally. It was necessary to link inflation figures to the consumer price index to reflect purchasing power.

Fuel price hike

Genset Manufacturers’ association president S. Sampathraman said the pre-budget increase in prices of petroleum products could have been avoided with crude oil prices coming down in international markets. The fuel price increase would push up costs of all inputs with adverse effects on smaller industries.

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