Finance Minister P Chidambaram will have to do a balancing act in the face of growing pressure from the Left parties for an overall increase in taxes while providing the much-needed stimulus in the Union Budget to push economic growth.
"A tightrope walk is inevitable for the Finance Minister as there is an evident pressure from the Left parties who want a complete overhaul of tax structure by hiking rates. At the same time, he will have to look at providing sops to boost exports and infrastructure development to push growth," FICCI Secretary General Amit Mitra told PTI in Mumbai.
Exports have fallen and some of the key export sectors like textiles have witnessed large-scale job losses with textiles becoming uncompetitive due to appreciation of rupee.
"We, therefore, demanded that the Budget should consider some duty drawback in order to provide them a level-playing field," Mitra said.
Mitra also urged Chidambaram to press the pause button this year on government's stated policy to bring down India's import duty to the ASEAN level.
The government's commitment to reduce import duty every year should be halted, particularly when the Indian industry is facing challenges because of imports becoming cheaper due to rupee appreciation, he said.
Mitra expected the Budget will give thrust to education, health and water.
"There is a need to allocate more to these sectors, particularly to the education sector. There is a requirement to increase the total base of teachers, which is much lower than the requirement. A need is also there to lay emphasis on the training of teachers," Mitra said.