P. K. Bhardwaj
`Budget misses opportunity to boost growth'
NEW DELHI: The Union budget 2007-08 on Wednesday left the corporate sector crestfallen. Apart from dashing its hopes and expectations to ground, Finance Minister P. Chidambaram virtually belied all budget predictions and forecasts made by experts, though with a few exceptions.
Starting their reactions with customary welcome by complimenting Mr. Chidambaram for major steps he has proposed in the social sector, industry could not hide for too long its disappointment with his budget as the impact of the proposals started sinking in.
With lowering of the tax burden no where in sight and the Finance Minister instead slapping additional cess of one per cent for secondary and higher education, hiking dividend distribution and enlarging the scope and coverage of the FBT net and the service tax, all apex industry chambers and trade bodies were crying that rather than lowering the tax burden, as expected by them, the FM had effectively enhanced it by one per cent.
Voicing concerns over lack of measures to increase productivity and for losing an opportunity to provide relief to the corporate sector, the Federation of Indian Chambers of Commerce and Industry of India (FICCI) chief, Habil Khorakiwala, said that "an opportunity of reaching a two-digit growth trajectory has been missed out.''
Equally vehement and caustic was the CII chief R. Sesashayee when he reacted by saying that this budget "is disappointing as there has been no steps announced to increase productivity in agriculture, electricity and other sectors which are not producing up to their potential.'' He pointed out that since revenues from peak customs and excise were increasing, this could have been a time to reduce the excise duty to 20 per cent, if not 15 per cent overall, which would have been in line with the Kelkar Committee report.
Describing the budget as `pragmatic' for `aam admi' (common man) and on expected lines to provide much needed boost to agriculture, education and health sectors, the Associated Chambers of Commerce and Industry of India (Assocham) chief, Venugopal N. Dhoot, said, "The budget, if read deeply, clearly spells its aim to generate development from the bottom by strengthening agriculture and SSI sectors with a new breed of entrepreneurs.''
Like his counterparts in other apex chambers, Mr. Dhoot said the impact of increase in the dividend distribution tax on corporates to 15 per cent would be negative on growth, investor sentiment and capital markets.
However, he asserted that various institutional framework have been provided and if monitored and implemented strictly will give huge benefits to the entire economy and the society.One per cent cess levied for secondary education, expansion of R&D incentives to all sectors were a welcome measure which in term would help the human resource of the country, especially support weaker sections of SC/ST, he added.
Sanjay Bhatia, President, Punjab, Haryana and Delhi Chamber of Commerce and Industry (PHDCCI), while welcoming the special attention to agriculture and the education sector besides reducing the fiscal and revenue deficits, felt that Mr. Chidambaram should have to introduced path breaking policy initiatives capitalising on the resurgence in economic growth and tax buoyancy.
The allocation of Rs. 500 crore for developing infrastructure for the Commonwealth Games would be grossly inadequate, he said.