By IANS,
New Delhi : The government should further rationalise tax structure and continue with stimulus measures to sustain growth as the global economic recovery remains fragile, stakeholders of different industry groups said Tuesday.
In their pre-budget consultations with Finance Minister Pranab Mukherjee here, heads of top industry lobbies urged the government to incentivise employment intensive industries and reduce duties to boost manufacturing growth.
Direct and indirect tax measures should be tailored to support domestic demand and the government should ensure that there is no rollback of the stimulus measures at a time when the global economy is still not out of the woods, said Rajan Bharti Mittal, president of the Federation of Indian Chambers of Commerce and Industry (FICCI).
FICCI suggested abolition of surcharge and education cess and reduction in central sales tax (CST) rate to one percent from the existing two percent.
“Factors such as slow recovery of the developed economies, rising inputs costs, tight liquidity conditions and rising interest rates pose a downside risk to growth,” said Hari Bhartia, president of the Confederation of Indian Industry (CII).
“The emphasis for Budget 2011-12 should, therefore, be on maintaining and even accelerating the pace of economic recovery and speed up employment generation,” Bhartia said.
The CII president said that to attract more overseas capital foreign direct investment (FDI) should be allowed in multi-brand retail and also in the defence sector.
FDI in multi-brand retail should be opened up as this is a capital intensive sector and the entry of foreign players will lead to greater competition in this critical sector. Similarly, higher FDI should be allowed in the defence sector, Bhartia said.
In his opening remarks at the pre-budget meeting, Mukherjee said good performance of industry, especially manufacturing sector was crucially important to maintain high economic growth and fund critical public expenditure on social and infrastructure development.
Mukherjee pointed out that industrial production has achieved a cumulative growth of 10.3 percent during April-October 2010.
“Sustained robust expansion in capital goods and consumer durables segments is an indication of the pick-up in industrial activity,” finance minister said.