Corporate India has urged the Government to take an aggressive policy stance in the Budget to boost investments, which has declined considerably.
The investment sentiment has been adversely impacted by the uncertain economic outlook, besides worsening macro-economic parameters.
At a pre-Budget interaction with the Finance Minister, Mr Pranab Mukherjee, the captains of Indian industry called for the re-introduction of investment allowance, hike in depreciation on plant and machinery, fast-tracking implementation of 100 mega projects, besides simplifying tax and regulatory compliance.
They also wanted the Finance Ministry to enable a 50 basis point cut in interest rates to boost industry.
Assocham President-elect, Mr R.N Dhoot, suggested that the rate of depreciation on plant and machinery should be restored to 25 per cent from 15 per cent now. The rise in depreciation rate in the long run is revenue-neutral, as the total amount cannot exceed the cost of assets, he said.
FICCI President, Mr R.V. Kanoria, said investment allowance must be restored to motivate entrepreneurs to undertake productive investments. He also called for the reduction in minimum alternate tax to a reasonable level, not exceeding 50 per cent of the basic corporate tax rate.
Later, Mr Kanoria told reporters that he also urged the Finance Minister to hasten the disinvestment process and also take steps to privatise Coal India. The various units of Coal India should be segregated into separate entities and privatised, he said. FICCI has also made a case for retaining corporate tax, excise duty and service tax rate at current levels.
Keeping in mind the challenge to the fiscal situation, CII President, Mr B. Muthuraman, desisted from asking for a direct stimulus that would entail excise duty cuts. The chamber, however, was against any increase in excise duty and service tax or any reduction in customs duty till the situation returns to normal. The Confederation of Indian Industry wants the States to be encouraged to legalise land-leasing process in the farm sector, where more than 80 per cent of landholdings are less than 2 acre. Land leasing can be allowed for more than 10 years without compromising on the ownership rights of farmers, CII said.