Chidambaram says immediate priority to keep investment cycle going
New Delhi, January 17, 2013
Union Finance Minister P Chidambaram has said that the immediate priority of the Government was to keep the investment cycle going and stressed that both domestic and foreign investments were not an option but an economic imperative for the country.
At a pre-Budget consultation with representatives of the industry and trade here yesterday, Mr Chidambaram said there were some positive signs in the economy but no discernible trend so far.
He said the Cabinet Committee on Investment, set up recently, was meant to resolve inter-ministerial issues and speed up clearances for projects.
Those who participated in the meeting included Mr Adi Godrej, Confederation of Indian Industries (CII), Ms. Naina Lal Kidwai, Federation of Indian Chambers of Commerce and Industries (FICCI), Mr Rajkumar N. Dhoot, ASSOCHAM, Mr Sandip Somany, PHD Chamber of Commerce and Industry, Mr Rafeeq Ahmed, Federation of Indian Export Organizations (FIEO) and Mr Som Mittal, NASSCOM.
Also present were Mr Ashwin Dani, Asian Paints, Mr Tulsi R. Tanti, Suzlon Energy Ltd, Mr Anand Mahindra, Mahindra & Mahindra Ltd, Mr Nitin Paranjpe, Hindustan Unilever Ltd, Mr J. Vadivelu, South Indian Chamber of Commerce and Industry, Mr Joginder Kumar, Federation of Tiny & Small Industries of India, Mr Aman Chadha, EEPC, Mr Vipul Shah, Gems & Jewellery EPC, Mr Arvind Vadhera, Export Promotion Council for Handicrafts and Mr P.C. Nambiar, Export Promotion Council for EOUs and SEZ among others.
The industrialists made various suggestions, including that the present rates of excise and service tax rates be maintained if not reduced, government may allow 2 % interest rate subvention for all sector of exports, allow 25% accelerated depreciation for investment in plant and machinery for pre-defined period of 3-5 years to prepone investments without affecting revenues, 250 % weighted tax deduction on expenditure incurred by companies on going green and unutilised assets of public sector enterprises be monetized and revenues generated be used for investment in infrastructure.
Other suggestions included acceptance of the recommendations of the Kelkar Committee Report, disinvestment process be started from the beginning of financial year rather than in the end, deregulation of diesel, early implementation of GST, no tax on transactions in Commodity Exchanges and non introduction of inheritance tax.
Other suggestions included efforts to unlock money struck in tax litigation, tax benefits to MSME sector, waiving of excise duty on 14 inch colour TVs and various Export Oriented Units among others.
It was suggested that nothing in the budget should dampen the spirit of investors or create a negative perception.
Mr Chidambaram also held pre-Budget consultations yesterday with the finance ministers of states and told them that the fiscal consolidation roadmap for the Centre had been laid out and the Government would not breach the fiscal deficit limits.
He highlighted the challenges being faced by the economy and the urgency of the reform measures needed to address them.
He drew the attention of the state finance ministers to the consequences of a high fiscal deficit and said that the high current account deficit (CAD) was another major challenge.
Mr Chidambaram urged the states to fast track clearances required for investment proposals. He said that if concrete measures were tkaen to tackle these challenges, the next year would be better for the economy.
The meeting was attended by two Chief Ministers and a Deputy Chief Minister holding Finance portfolio, 17 Finance Ministers of states/Ministers representing their Finance Ministers and officers of the Central and state governments.
Mr Chidambaram spoke about the benefits of the direct benefit transfer (DBT) scheme and outlined the roadmap for expansion of the pilot. He said the state governments could use this platform for benefits given by them.
He said an extensive exercise was on to rationalise Centrally-sponsored schemes and expressed the view that all smaller schemes should be transferred to states.
Later, the Finance Ministers of states/UTs raised a range of issues. Many states raised the issue of roadmap for GST and CST compensation. Many states gave specific suggestions about Central schemes and unanimously supported rationalisation of Centrally Sponsored Schemes.
Some states made specific observations about the terms of reference of the Fourteenth Finance Commission. Some States suggested specific tax changes to promote specific sectors in their states.