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BANKERS URGED TO BRACE UP TO MEET CHALLENGES

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 16 :
THE Union Finance Minister Mr Pranab Mukherjee said that the growth rate would be around 7.2 percent during the current year. He was addressing the CMDs/CEOs of banking and financial institutions in a pre-Budget meeting here on Thursday.

He said that due to current uncertainty in global economy as euro zone crisis is still unresolved and volatility in international commodity prices especially fuel etc, it may be difficult to contain the fiscal deficit at 4.6 percent as targeted during the last budget.

Mr Mukherjee said that this is a very challenging year for all of us.

He said that we have to work together to meet these challenges.

Mr Mukherjee stated that all banks and financial institutions whether public or private have a common goal of working towards a healthy economy.

He said that we should work together to attain this common objective.

Mr Mukherjee said that the international crisis of 2008 and the ongoing euro zone crisis have impacted us also and resulted in problems of inflation, deceleration of GDP and fiscal deficit.

He sought suggestions from the various stakeholders in formulating the Budget for 2012-13 in the current economic situation.

The representatives of banks and financial institutions gave various suggestions. It was stated that there was a case for increasing the credit to GDP ratio in India which is one of the lowest in the world.

"Our that our savings rate is about 32 percent but only one third of it reaches the banks. Therefore, there is a need for removal of handicaps which banks face in mobilizing the deposits. In view of the high costs of education, it was said that it will be useful if education loan guarantee scheme could be launched. It was suggested that there should be a separate taxation window for pension funds and long term funds. The need to support infrastructure funding was highlighted. A demand was made to make banks eligible entities to issue tax free infrastructure bonds, he stated.

The requirement for special incentives for investors to invest in infrastructure bonds was also highlighted. A need for clarity and broadening of the definition of the infrastructure was also raised.

The participants said that infrastructure should be taken as a priority sector and there should be an independent regulator for infrastructure. It was suggested that single window clearance for the infrastructure sector projects including power projects would go a long way in attracting huge investment in this sector.

It was suggested that there was a need for rationalization of transaction charges in the secondary market and also to boost microfinance.

Regarding financial inclusion, it was said that banks who have done well in this regard may be given incentives in order to take them to the second level of economic inclusion. Participants focussed on the need to encourage agriculture lending, SME lending and highlighted the issues of rural ware housing and food inflation etc.

Beside the Union Finance Minister Mr Mukherjee, the Minister of State for Finance, Mr Namo Narain Meena, Adviser to FM, Secretary (Economic Affairs), Secretary (Expenditure), Secretary (Financial Services), Secretary(Disinvestment), Chief Economic Advisor and Chairman, CBDT were present among others.

The meeting was attended among others by Mr K.C. Chakraborty, Dy. Governor, RBI, Chairperson/CMD of various banks and financial institutions including Mr Prakash Bakshi from NABARD, Mr R.V. Verma from National Housing Bank, Mr Pratip Chauduri from State Bank of India, Mr D.K. Mehrotra from LIC, Ms. Chanda Kochhar from ICICI Bank, Mr K.R. Kamath from Punjab National Bank, Mr T.C.A. Ranganathan from EXIM Bank, Ms. Naina Lal Kidwai from HSBC, Mr S.K. Goel from IIFCL, Mr Sunder Rajan Raman from Canara Bank, Mr R.M. Malla from IDBI, Mr M. Narendra from Indian Overseas Bank, Mr Arun Kaul from UCO Bank, Ms Shikha Sharma from Axis Bank, Mr Rana Kapoor from Yes Bank and Mr A.R. Sekar from New India Assurance .

Besides, Mr Uday Kotak,Vice Chairman and MD, Kotak Mahindra Bank , Mr Atul Kumar Rai, CEO,IFCI and Mr Raman Aggarwal from FIDC also attended the aforesaid meeting among others.

LATAM, CARIBBEAN COUNTRIES CALL FOR ENHANCED TRADE WITH INDIA

THesynergyonline Economic BUreau

NEW DELHI, JANUARY 19:
INDIA, Latin America (LatAm) and the Caribbean countries have limitless potential for diversified trade engagement amid tough global macro-economic conditions stemming from the 2008 financial crisis, trade representatives and diplomats said on Thursday.

The specific areas in which natural partnerships have evolved over the past decade include hydrocarbons, mining, commodities, pharmaceuticals and information technology, they said at an interactive session organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

In the next two years, a liberal visa regime and direct air connectivity are expected to fructify, said Mr Dammu Ravi, joint secretary at the ministry of external affairs. "This will lead to conducive business environment and greater South-South cooperation in trade and investments," he said.

Nearly 40 countries in the LatAm region offer vast land and water resources, stable political governments and huge markets.

Economic reforms are underway in all countries, leading to fast recovery from the lingering global financial meltdown, said Venezuela ambassador to India Milena Santana Ramirez.

"India and LatAm are two fast-growing economic regions of the world," she said. "We should promote new partnerships for inter-regional trade cooperation by taking advantage of complementarities."

Ms Ramirez said business leaders should aim at diversifying the export basket, applying new technologies and encouraging innovation to gain competitiveness besides reducing transportation and transaction costs to sbenefit consumers in both regions.

Mr Sushil Maroo, chairman of ASSOCHAM India-LAC Business Promotion Council, said many Indian companies are investing in LatAm countries. On the other hand, India offers a huge market and several opportunities for LatAm products.

India's merchandise exports to LatAm countries jumped 1,012 per cent from $960 million in 2001-02 to $10.7 billion in 2010-11. The imports moved up 1,151 per cent from $.01 billion to $3.8 billion in the same period.

Among India's major trading partners are Brazil, Venezuela, Bahamas, Mexico, Chile, Argentina, Colombia, Peru, Ecuador and Panama.

The exports to LatAm countries include petroleum crude and products, transport equipment, drugs and pharmaceuticals, fine chemicals, ores and minerals, man-made yarn, fabrics and made-ups, machinery and instruments, metal products, and readymade garments.

The imports include petroleum crude and products, metalifer ores and metal scrap, vegetable oils, sugar, iron and steel, electronic goods, organic chemicals, and transport equipment.

Among others present at the session were Costa Rica ambassador Juan Fernando Cordero Arias, Columbia's ambassador Juan Alfredo Pinto Saa Vedra, Cuba's ambassador Abelardo Rafael Cueto Sosa, El Salvador's ambassador Ruben Zamora Rivas, Panama's ambassador Julio De La Guardia, Peru's ambassador Javier Manual Paulinich Velarde, Trinidad and Tobago's high commissioner Chandradath Singh, Chile's agricultural and commercial counsellor Rodrigo Gallardo and Dominican Republic's commercial counsellor Carlise Novel.

GRANT ' INFRA STATUS' TO AGRI-WAREHOUSING , COLD CHAIN SECTOR

Sanjay Kaul, MD &CEO, NCMSL

IT is unfortunate that despite fervent pleas by industry the agri-warehousing and cold chain sector has not been granted “infrastructure status”. There is an estimated 32 million shortage in storage capacity, and even conservative estimates put the immediate investment requirement at Rs. 10000 crore.

The Finance Minister had amended section 35 AD of the Income Tax Act to permit full depreciation to be charged in the year of investment. This concession has proved inadequate as it amounts only to a tax deferral and provided no tangible tax relief. It is only the grant of infrastructure status that will provide a major fillip for investment in this vital sector.

Agri warehousing currently receives a marginal subsidy through a NABARD implemented scheme. This minuscule subsidy has not helped make investment in warehousing viable.

In addition, NABARD under a new window of direct financing should provide direct loans at lower rate of interest to the private sector for warehousing, integrated supply / cold chain and allied infrastructure development activities in the rural areas, under RIDF funds. Mere refinancing and state loans does not comply fully with NABARD’s mandate or purpose for which it was created

There is also need to eliminate the need for different VAT registration numbers across states for entities and individuals license by the newly set up Warehouse Development and Regulatory Authority [WDRA].

In fact, VAT / CST should apply only when physical transfer of agriculture produce takes place. This will encourage free movement and trade and serve to stabilize prices of agricultural commodities across the country.

Expectations for an Inclusive Healthcare Budget

Ms. Charu Sehgal, Senior Director,
Deloitte Touche Tohmatsu India

The state of healthcare in most parts of India belies the statement that “India is an emerged economy”. India’s bed ratio at 0.86 per thousand populations is much lower than the world average of 2.6. The scenario is more alarming in rural areas where the ratio stands at 0.1 beds for every thousand. The paradox of the two Indias is probably not as stark anywhere as it is in the health sector.

This year’s budget needs to address the issue of an inclusive health care system through a two pronged approach.
Firstly, increased allocation towards health (from 1.45 percent of GDP to at least 2 percent) and continued focus on infrastructure creation, service delivery improvements and addressing emerging challenges.

Secondly, focus on supporting and incentivizing the private sector to participate in ensuring access to quality healthcare across the country especially in smaller towns and rural areas.

Some of the expectations from the budget include:

· Infrastructure
A five year tax holiday currently exists for healthcare projects in Tier II/III cities/rural India. Keeping in view the long gestation period for such hospitals to break even the budget is expected to allow them to avail this holiday in any five years within 10 years of commencement of operations.

Launch of the National Urban Health Mission especially focusing on slum dwellers in 429 cities where health indicators are lagging behind urban averages.
· PPP

Announcements/incentives to encourage innovative PPP models across the healthcare ecosystem in provision of primary and secondary care.

Medical Education
One of the major constraints faced by the sector is the huge shortage of medical and paramedical professionals. There is an expectation that the Government would increase allocation for setting up Govt Medical education facilities as well as review some of the norms for setting up medical colleges to encourage private players to invest in areas where there is a huge shortage e.g the North East.

· Health Insurance
Social insurance has been an effective tool to provide purchasing power in the hands of the poor and encouraged provision of healthcare services in small towns by the private sector. Increased coverage under the RSBY scheme is expected.

Removal of service tax on health insurance premium would be welcome.
· Prevention of Non Communicable Diseases
WHO has estimated that India could lose $237 billion in national income due to chronic non-communicable diseases over the next 10 years and incidence would spread to Tier-2 and 3 cities and rural areas as well. Therefore allocation of funds towards awareness generation, detection and prevention of non communicable diseases is envisaged.
· Support to Indigenous Manufacture and Innovation

Expenditure on medical devices forms a large part of the investment and expenditure of health care providers in India (currently 75-80 percent of all medical devices are imported). The industry has been demanding incentives, to encourage indigenous manufacture and frugal innovation.

Bhim Yadav, CEO, Falcon Realty Services Private
IT is important to relieve the main cities of the population burden and also to bring planned infrastructures for the people. As townships cater to all segments of real estate from affordable to luxury, it reflects the correct mix required for the society. There should be some steps from the government that should reflect promotion of townships.

Affordable housing remains a segment where government should definitely continue to provide developers with tax free status which was available earlier. Rather than restricting it to unit sizes government should restrict the prices at which these units can be sold. Affordable housing developers need to be given incentives for creating such an infrastructure in the country. Hence, integrated affordable housing project development should be accorded infrastructure status for the purposes of RBI, SEBI, IRDA and CBDT.

I would also like to see something on promotion of green buildings in India. Government does not have specific tax benefits or policies for accounting towards the higher costs incurred in Green Buildings. Government could benchmark apex bodies similar as Singapore Green Building Council and provide a structured approach through higher levels of depreciation and tax breaks for certified Green Buildings.

These initiatives are important keeping in mind the deteriorating environmental conditions the world over.

The sector actually needs to be seen with greater concern as the country is faced with an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) and the upcoming residential and commercial projects to fulfill the demand in Tier-II and Tier-III cities highlights the next stage of growth for the sector.

For instance, several residential projects are seen coming up in cities such as Jodhpur, Ajmer, Jaipur, Panipat, Kundli and Agra. These Tier-II and Tier-III cities are also witnessing the launch of integrated township projects, majority of them being in Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan and Haryana.

The growth in real estate in Tier-II and Tier-III cities is mainly due to increase in demand for organised realty and availability of land at affordable prices in these cities.

CUT STAMP DUTY TO 4.5% : RK JAIN, ED, WAVE CITY , GHAZIABAD

Income tax deduction u/s 80-IB was available to developers for affordable housing.
This facility was discontinued w.e.f. 01.04.2008. This concession was highly
successful in triggering affordable housing but since State laws were not permitting
higher densities, the benefit of it could not be realised to fullest possible extent.
Now almost all State Governments have relaxed their density norms, revival of
concessions u/s 80-IB would give boost to affordable housing.

Stamp duty needs to be brought down further to 4-5% and made uniformly
applicable across all states. Also, if stamp duty has already been paid on one transaction, there should be a mechanism to provide concession or a system of credit for any subsequent transactions.

This would avoid the resultant cascading effect of Stamp Duty, thereby reducing
the cost of a property. The concept of credit for taxes paid on subsequent
transactions already exists in other statutes such as CENVAT, VAT, MAT, etc.

Section 80-IA of the Income Tax Act provides that where the gross total
Income of an asessee includes any profits and gains derived by an undertaking
or an enterprise from any of the business of either (i) developing or (ii) maintaining
and operating or (iii) developing, maintaining and operating any infrastructure facility
then a deduction equal to 100 percent of the profits and gains derived from such
business shall be allowed for ten consecutive assessment years.

Similar tax benefits should also be given to developers who are engaged in undertaking
large scale urban development projects such as townships of more than 1000 acres.
Such projects tend to reduce the pressure on existing cities by providing low priced
alternatives and value for money
to the customers.

“Wave City” is the self sustainable integrated township project by Wave
Inc. (the erstwhile Chadha Group), the Rs. 2,500 crore diversified Group
with business interests spanning malls – development & operations;
multiplexes – development & operations; sugar manufacturing; distilleries;
paper manufacturing; liquor retail management and Coca Cola bottling plants.

The sector actually needs to be seen with greater concern as the country
is faced with an estimated shortage of 26.53 million houses during the 11th Five
Year Plan (2007-12) and the upcoming residential and commercial projects
to fulfill the demand in Tier-II and Tier-III cities highlights the next stage of
growth for the sector. For instance, several residential projects are seen
coming up in cities such as Jodhpur, Ajmer, Jaipur, Panipat, Kundli and Agra.

These Tier-II and Tier-III cities are also witnessing the launch of integrated
township projects, majority of them being in Uttar Pradesh, Punjab, Madhya
Pradesh, Rajasthan and Haryana. The growth in real estate in Tier-II and
Tier-III cities is mainly due to increase in demand for organised realty
and availability of land at affordable prices in these cities.

“For the last 2 years, we are representing Government on certain points/issues
which we would like to get addressed in budget and they are: extension of tax
holidays on EWS and LIG housing under section 80 IB, upward revision in
interest on home loan deduction limit, reintroduction of standard deduction,
industry status to real estate. Extension of JNNRUM and RAY scheme and to
include private developers for this purpose, rationalization of stamp duty,
allowance of ECB in reality sector, nationalization of financing norms by RBI.

In real estate most important issue is availability and accessibility to cheaper
finance and incentive to home buyers particularly in LIG and MIG segment.
In past 6 months, the home loan and project financing rates have gone up
substantially and it is expected that it will further go up. In this scenario
if government will not give the incentive to the home buyer, the demand
may come down and sector will be badly affected.

FM should consider that the tax payers should get incentives for buying homes
and that is possible only when they have the disposable income. As real
estate industry is demanding upward revision in interest on home loan
deduction and rebate in repayment of home loan under section 80 C the
buyer will have incentive to buy house even if the interest rate goes high”.

FM MEETS FILM INDUSTRY DELEGATION

Thesynergyonline Economic Bureau

NEW DELHI, FEBRUARY 04 :
UNION Finance Minister Mr Pranab Mukherjee met here today the film industry delegation who were accompanying the Minister of Information and Broadcasting Ms. Ambika Soni as part of his pre-Budget consultations.

The delegation consisted of about 20 members including Mr Yash Chopra, Mr Ramesh Sippy, Mr Mukesh Bhatt all representing Films and Producers Guild, Dr. Amit Mitra, Secretary General, FICCI, Mr L. Suresh, Vice President, Film Federation of India, Ms. Anuradha Prasad, Chairperson, AROI, Mr Rajeev Waghle, Group CFO, UTV, Mr Subhashish Sarkar, CFO, Reliance Big Films, Mr Ashish Kularni, CEO, Big Animation and Mr Puneet Goenka, CEO, Zee Tele films among others.

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 18 :
UNION Finance Minister Mr Pranab Mukherjee held a meeting with noted economists to get their inputs for General Budget 2011-12, here today. This was the fifth meeting in the series of pre-Budget consultations held by Finance Minister with the stakeholders of different sectors.

While welcoming the economists, in his opening remarks, Mr Pranab Mukherjee said that he was keen to have this meeting with Economists as a part of his pre-budget consultation for the preparation of Union Budget 2011-12.

He said that he greatly value thier knowledge, experience and exposure to diverse issues, some of which our economy is confronting at present. Mr Mukherjee said that he expects their inputs to help in Budget making and improving the policy management of the economy in the coming months.

Mr Mukherjee said that we have been fortunate in surviving the global financial crisis without major disruptions and have recovered our growth momentum much faster than most others. In the first half of 2010-11 the Indian economy recorded an overall GDP growth of 8.9 per cent which takes us back on the high growth path that the economy was traversing on in the years prior to the crisis, he said. Mr Mukherjee said that the recovery has been broad based with agriculture, industry and services all contributing to the consolidation of the growth momentum.

He said that the industry has driven the recovery process so far. Though industrial growth during the month of November 2010 has slipped to 2.7 per cent, cumulative growth during April-November 2010-11 is still high at 9.5 per cent compared to 7.4 per cent during the corresponding months of 2009-10, he said.

Mr Mukherjee said that with normal monsoons, we are looking at a significant rebound in agriculture and allied sector growth at about 6 per cent. Exports have also done reasonably well with export growth in April-November 2010 at 26.7 percent, said the Minister.

He said that this resilience that India has demonstrated in recent times reflects a maturing of the economic management of the country and the growing competitiveness of our enterprise. He said that this has happened even as the economy has become more integrated with global markets.

He further said that economic recovery was driven by a deliberate fiscal expansion during and immediately after the global crisis and supported by monetary policy easing. With a broad-based recovery underway, a calibrated exit of stimulus is being implemented as a part of the Budget 2010-11, he said . The Minister further said that the progress in reduction in fiscal deficit for the year 2010-11 is in line with the commitment made in the medium-term fiscal policy statement.

He said that India’s growth momentum, to some extent, is affected by developments in the western world. A faster recovery in the west is in the global interest, he said. The Minister further said that the creeping increase in international crude oil and other commodity prices is a reality that we are already confronting. High food prices, caused in part by severe drought conditions last year, and by rising incomes, have been driving inflation in India. Other countries are also experiencing rising food inflation, he said.

Mr Mukherjee said that our emphasis is on ‘inclusive development’ and we want the growth process to especially empower and enrich the poorer sections of society. The Government is keen to upgrade the delivery mechanisms in the health and education sectors so that the disadvantaged sections of society are well equipped to benefit from the growth process, he said.

FM HOLDS MEET WITH DIFFERENT NGOS

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 13 :
THE Union Finance Minister Mr Pranab Mukherjee held a meeting with different non governmental organizations (NGOs) to get their inputs for General Budget 2011-12, here today. This was the fourth meeting in the series of pre-Budget consultations held by Finance Minister with the stakeholders of different sectors. First meeting was held on January 7 with the stakeholders of agriculture sector followed by meetings with captains of Indian industry on January 11 and representatives of different trade unions yesterday .

While welcoming the representatives from different Non-Governmental Organizations (NGOs), the Finance Minister Mr Mukherjee in his opening remarks said that feedback from the grassroots level is very important for effective policy making and for strengthening public accountability.

The Minister said that the Indian economy has recovered robustly in 2010-11 from an unprecedented global economic slowdown. He said that it has recorded one of the fastest growth rates in the world and the recovery has been broad based with agriculture, industry and services all contributing to the consolidation of the growth momentum. Though, there are some immediate concerns for economic management arising from inflationary pressures, and from the uncertain external environment, we have the ability to address them, the Minister added.

Mr Mukherjee further said that our main challenge is to sustain this high GDP growth over an extended period of time and find the means to cross the 'double digit growth barrier' in the coming years. He said that the objective is to harness this growth to make the development process more inclusive, strengthen food security, improve education opportunities and health facilities both in rural and urban areas. At the same time we are looking to address the weaknesses in our systems, structures and institutions at different levels of governance, he added.

The Finance Minister Mr Mukherjee said that with development and economic reforms, the focus of economic activity is shifting towards the non-governmental actors and there is a need to create and strengthen an enabling ethos so that individual enterprise can flourish and ordinary citizens can, for most parts, provide for the needs of one another. He further said that the Government has to step in to help those who do not manage to do well for themselves. Shri Mukherjee said that the Government has to safeguard the interests of citizens who are left out in the growth process. It is this balance in policy that we have tried to evolve in the past few years, he added.

While describing the nongovernmental sector as an important stake holder in the development process, Shri Mukherjee said that we are aware that It has been the Government’s endeavour to engage this sector in policy making, to improve the delivery of public goods and services to the people and help in strengthening accountability of public agencies and public officials. He said that the NGO sector in India has done an excellent job for the public cause, for monitoring and evaluating public programmes and services and has also helped directly in the implementation of developmental activities.

Mr Mukherjee later invited the representatives for giving their concrete suggestions which can be operationalised in this year’s budget proposals.

After that the stakeholders from different NGOs gave their suggestions for consideration for General Budget 2011-12.

The representatives from different NGOs who attended the meeting include Binju Abraham from PRADAN, Ms. Namrata Bali from SEWA Academy, Swami Atmapriyananda from Ram Krishan Mission, Mr Sandeep Pandey from ASHA, Mr Mohamed Musa from Care India, Mr D.R. Mehta from Jaipur Foot and Swami Agnivesh from Bandhua Mukti Morcha (BMM) among others.

INDUSTRY SEEKS INFRASTRUCTURE INCLUSION

Thesynergyonline Economic Bureau

NEW DELHI, JANUARY 11 :
INDIA today is about inclusive growth. The industry Chamber is fully aligned with the Government vision of creating balanced growth for all segments and regions of the country. The focus over the next few years is about making this inclusive transformation happen. We laud the Government policies of last few years that have been extremely conducive to growth while also ensuring that our country emerges relatively unscathed from the global recession. Our belief is that we as a country have the potential to grow even faster, and with some right interventions and policy changes, we can meet our Prime Minister's vision of 10 percent GDP growth. Mr Dilip Mody , president, Assocham, raised these issues at a pre-Budget meet with the Union Finance Ministerr, Mr Pranab Mukherjee .

A comprehensive pre-Budget memorandum outlining our recommendations for the upcoming budget for the year 2011-12 has been submitted to the Ministry, and we look forward to a detailed discussion on the same. The followings are some of key suggestions and the rationale behind them.

The industry body look up to the Government to build the right environment for creation of
the right physical and social infrastructure,
· a level playing field to compete globally,
· an efficient digital infrastructure
· an enabled consuming class
· and world class manpower

Specific recommendations for each of the above:

· Infrastructure Inclusion - Infrastructure inclusion means access to world class physical and social infrastructure. As we have seen over the last few years, our companies are world beaters provided they get a fair chance. We believe that increased investment and right incentive structure to increase private sector participation in Infrastructure will help unleash the entrepreneurial potential of our growing pool of talent, and help us grow much faster. Our specific recommendations are:
The Government should retain the concessions that make the infrastructure sector attractive for the private sector, so that the private investment in infrastructure does not slow down. While we welcome the provisions being cited by the Direct Tax Code, it is imperative to retain the benefits available under section 80(I) A till the Direct Tax Code provisions are applicable such as to not slow down the momentum created over the last few years. In addition, while we realize that MAT is key for the Government to balance its finances, we recommend that it not be higher than 50% of regular corporate tax - this we believe will go a long way in creating the right expectation framework for Private sector to create its investment strategies
The Government should increase its budget outlay and grant infrastructure status (as defined under the RBI regulations as well as the prevailing tax statutes) to industries such as Education, Healthcare, Telecommunications, Internet and Agriculture, that are key long term drivers of growth.
The definition of infrastructure as applicable under various incentive schemes should be extended to include rural infrastructure like village kiosks, housing, IT infrastructure, water harvesting facilities like check dams, storages including farmer facility centers and green and poly houses.

Global inclusion - The markets we today operate in are global in nature, and so is the competition. As the Honorable Minister is well aware, the Global economy is not yet fully recovered post the recession of 2008. While the Industry is trying its best to compete with companies globally, we look for Government to continue its support so that we can have a level playing field against companies from other economies.

We recommend that:

Excise and services tax be retained at the current level of 10 percent.

Corporate tax rate be brought down from 30 to 25 percent

Investments in building an R&D ecosystem be encouraged by making benefits available irrespective of whether R&D is in-house or out-sourced.

Digital inclusion - As an association, we laud Government's efforts that have led to the spectacular growth in tele-density in our country. The growth of mobile telephony has empowered our people and companies and has helped improve efficiencies. Our belief is that with the physical infrastructure slowly getting into place, the Government should now focus its efforts on enabling the access of masses to knowledge infrastructure. This is imperative for our country to compete in the knowledge economy. We recommend:
The Government should encourage creation and use of digital infrastructure by incentivising the Industries focused on building digital services. Government should grant infrastructure industry status to the Internet and Mobile Value-Added services sectors given that they are key enablers in supporting the creation of a viable digital infrastructure economy.
The Government should augment the investment ability of the telecommunications industry so that the marvelous growth we have seen does not taper off. For this, we recommend lowering cumulative levies and duties from the current 30 percent to a level comparable to those prevailing in the other Asian economies of around 5-10n percent.

In addition, we also recommend that the telecommunications equipment sector be exempt from state level taxes such as Octroi, Entry and Sales tax till 2015.
The Government should encourage consolidation in the sector to build investment capacity. We believe that altering the M&A provisions to allow continuation of tax holiday benefits and carry over of losses will help in this direction.

Financial inclusion - Almost 50 percent of our population is unbanked and we have to explore viable models for financial inclusion. In this respect we have 2 specific points :

We must allow for smaller Private Banks to operate, as smaller capital requirement of these banks can be easily monitored under capital adequacy norms. Besides global experience supports the efficiency of these banks as compared to larger banks.
Irrespective of the defects in the microfinance institutions (MFIs) displayed largely in Andhra Pradesh, we must ensure the survival of these institutions without waiting for the Malegam sub committee report (which will be out in January end and 2-3 months may lapse before it is implemented). The public sector banks must start lending to MFIs and ensure that we do not lose the positive aspects of a business model because of the faults of a few players.

·Talent and social inclusion - For sustainable and long term growth, it is important that benefits of growth percolate to everyone. To do so, the Government should encourage employment generation by the Industry, and encourage investments in areas that are critical to creation of Talent pool within the country. Our specific recommendations for this are:
Tax incentives to sectors like Textiles, Agriculture, Civil construction, Roads, Ports and Services sectors like IT & Telecom, that have high employment generation potential, be linked to the incremental employment generation in addition to capital investment or profits.
In addition, tax incentives under section 35AD for 100% deduction of capital expenditure be provided in specialised areas within the education sector (such as medical education) to give a boost and a fillip to investments within such areas.

With over 60 percent of Indian people depending on Agriculture for sustenance, we believe that the Government needs to give special focus to improving the productivity and efficiency of the Agricultural sector. The Government should increase its investment outlay for agriculture particularly within watershed development, micro-irrigation systems and bio technology which are going to be critical in future to feed and increasing and more effluent population with a limited supply of land and water.

The Chambers specific recommendations for the agriculture sector are :
Creation of a separate Agriculture budget to ensure focus and execution and a phased move away from consumption to capital subsidies
Increase allocation for Accelerated Irrigation Benefit Programme by 50%
Increase capital assistance for micro irrigation under the “National Micro Irrigation Mission” to Rs 3000 crore
Provide special assistance for solar water pumps, say about Rs 100 crores which will greatly benefit farmers who have no access to electricity

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