Amid green shoots of economic recovery, business leaders on Tuesday urged Finance Minister Pranab Mukherjee to continue with the stimulus package pushed by the government last year to counter the effects of a downturn.
The minister, who met representatives of industry chambers including Confederation on Indian Industry, Ficci and Assocham, kickstarted the customary pre-budget meetings in the backdrop of an industrial revival coupled with anxieties over the prospects of tax hikes by a government trying to curb its deficit.
Some pushed for disinvestments to check the deficit, rather than measures that could hurt them.
The GDP growth rate for the second quarter of the current fiscal stood at 7.9 per cent, exceeding expectations. The government, in its mid year review, has projected a growth rate of 7.75 per cent for 2009-10.
Harshpati Singhania, president, Ficci said a tightening of the monetary policy to contain food price inflation could hinder growth while adversely impacting the industrial sector.
“We feel that fiscal sops must continue at this point. The GDP numbers (of 7.9 per cent for the second quarter) are driven by the stimulus packages,” Singhania said, adding that the possibility of exit should be reviewed only after September.
Assocham said a continuation of the stimulus package in 2010-11 would be critical for growth and recovery after which it could be phased out gradually. Swati Piramal, president, Assocham said that fiscal deficit can be partly contained through an expeditious disinvestment process.
The industry bodies also urged the minister to roll back the minimum alternate tax (MAT) to 10 per cent from 15 per cent. At present, companies pay 15 per cent MAT on book profits. The government hiked MAT from 10 per cent to 15 per cent in the last budget.
Ficci has also stressed the need to incentivise investments.