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'Need to focus on inclusive growth' 

Thesynergyonline Economic Bureau  

NEW DELHI, MARCH 13 :
OXFAM India along with the Centre for Budget and Governance Acountability (CBGA) has underscored the need for a budget that translates the vision of making inclusion a reality. They also demanded that the Government honour its commitment for higher public spending for the social sector and for programs that target the marginalized groups.   

Speaking at a pre-Budget press conference, Oxfam India CEO Nisha Agrawal said, “The Budget this year is doubly important because it is also the year when the 12th  Five Year Plan will be launched for the period 2012-2017. In this Budget, we need to focus on inclusive growth.

The Government needs to focus on higher public spending for the social sectors and for programs that target the marginalized group, she added. 

Speaking on key demands pertaining to disadvantaged sections and implementation of last year’s budget proposals, Executive Director, CBGA Subrat Das said, “The Union Government needs to pay adequate attention to the issue of systemic weaknesses in the government apparatus at the State, district and sub-district levels that have constrained the quality of implementation of most of the development schemes over the last decade.”

“In this regard, the Union Budget for 2012-13 needs to reflect government’s recognition of the problem of acute shortage of staff in most of the sectors (particularly the social sectors) and its intent to address the same," Das added.

Highlighting again on the importance on investing in crucial sectors, Praveen Jha, Professor of Economics, JNU said, “It is disturbing to note that India's total tax revenue has fallen from the already low level of 17.4  percent  of GDP in 2007-08 to 14.7 percent of GDP in 2010-11; hence, it is critical to step up India’s tax-GDP ratio, which would enable our government to provide more resources for investments in crucial sectors.

'Remove MAT, DDT on SEzs , extend Sunset Clause for EOUs'

Thesynergyonline Export Bureau 

  NEW DELHI, MARCH 12 : 
EXPORT  Promotion Council for EOUs and SEZs (EPCES) Deputy Director General, Mr  O.P. Kapoor, has informed that  the  Finance Minister Mr  Pranab Mukherjee will announce Union Budget 2012-13 on March 16, 2012 in the Parliament.  EPCES expects  Finance Minister to  release an exporter- friendly Union Budget.
 
He further informed that SEZs and EOUs are engines of economic growth of India  and are playing an important role in increasing exports, manufacturing and generating employment for the country. 

The exports from this sector in 2010-11 is to the extent of Rs.3,75,692 crore registering a remarkable contribution of 34 percent to national exports.
 
As regards SEZs, Mr  Ajay Nijhawan, Convenor, panel on SEZ Developers  said that SEZ Act was enacted for the purpose of providing long-term stability and continuity of the SEZ Scheme. Altering the provisions of SEZ Act within 5 years of implementation of the SEZ Act is sending a very wrong signal to the foreign and domestic investors, which are looking at India for its resources of skills and manpower.      
 
Mr Nijhawan said that Government has so far formally approved 587 SEZs.  Out of which, 380 SEZs have been notified so far and 154 SEZs are in operation as on 31st December, 2011. 

The total exports from SEZs during the financial year 2010-11 was to the tune of Rs.3,15,868 crore registering a growth of about 43.11 percent over the exports for the year 2009-10.. 

The exports from SEZs in the current financial year (i.e. upto 31.12.2011) has been to the tune of Rs.2,60,973 crore with a growth of 26.20 percent over the exports of the corresponding period of financial year 2010-11. 

As on December 2011 investments worth Rs.2,77,259 crore have been made in SEZs and direct employment of 7,32,839  persons has been generated in the SEZs. 

He said that SEZ sector has shown over 10 times growth in the last 5 years.
                  
Mr Nijhawan further said that the imposition of MAT and DDT in the last year’s Union Budget has created lot of uncertainty in the minds of SEZ Developers and Units and has sent wrong signals to national and international investors.
 
Mr Nijhawan is hopeful that, while announcing Union Budget 2012-13, the Finance Minister Mr Pranab Mukherjee will keep in mind the interests of SEZ community for removal of MAT and DDT on SEZs. 

He said that the Direct Tax Code should not be imposed on SEZs since Parliament has passed the SEZ Act and Rules only 5 years back and most of the SEZs being in development stage will be adversely impacted.  Shri Ajay Nijhawan, Convenor, Panel on SEZ Developers  urged Hon’ble Finance Minister to announce an exporter friendly Union Budget so that SEZs result in higher exports, additional investments and employment for the country.
 
 As  regards EOU Scheme, this scheme was introduced to encourage manufacturing sector, generate employment, creation of world class infrastructure,  increase exports, earn valuable foreign exchange for India.
 
The exports from EOUs during 2008-09 was Rs.1,76,923 crore which was decreased to Rs.72,152 crore in 2009-10.  The exports from EOUs during 2010-11 is to the extent of Rs.76,342 crore with a growth of 6 percent  over the exports of previous year from EOU sector. 

The exports of EOUs during first three quarters of current fiscal year i.e. April-December 2011 is Rs.54,032 crore.
 
After withdrawal of income tax benefit to EOUs under section 10(b) of the Income Tax Act effective from April 2011, over 750  EOUs  have debonded/exited from EOU Scheme.
 
EPCES hopes that while announcing Union Budget 2012-13, the Finance Minister will consider the recommendations of the committee set up to review, remodel and revamp EOU Scheme.

'Aam Aadmi's' budget wishlist

Thesynergyonline Economic Bureau

NEW DELHI, MARCH 11 :
RAISE the exemption limit, reduce tax rates, raise medical reimbursements, more in-hand savings, more employment and investment opportunities are some of the wishes an "Aam Aadmi" expects from the Finance Minster in the forthcoming budget for the financial year 2012-13, reveals the ASSOCHAM survey.

The Associated Chamber of Commerce and Industry of India (ASSOCHAM) interacted with about 500 employees from different sectors in cities of Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh and Dehradun.

Over 89 percent of the respondent said that the slab of tax free income has not moved up in line with real inflation.

The current basic exemption limit of Rs 1.80 lakh should be increased to Rs 3 lakh as it will spike up the purchasing power of individuals and stimulate demand.

About half of the respondents were in the age bracket of 25-29 years, followed by 30-39 years (25 per cent), 40-49 years (15 per cent), 50-59 years (10 per cent).

The survey was able to target employees from 18 broad sectors, with maximum share contributed by employees from IT/ITes sector (17 per cent). After IT/ITeS sector, contribution of the survey respondents from financial services is 11 per cent. Employees working in engineering and telecom sector contributed 9 per cent and 8 per cent respectively in the questionnaire.

Nearly 6 per cent of the employees belonged from market research/KPO and media background each. Management, FMCG and Infrastructure sector employees share is 5 per cent each, in the total survey. Respondents from power and real estate sector contributed 4 per cent each.

Employees from education and food & beverage provided a share of 3 per cent each. Advertising, manufacturing and textiles employees offered a share of 2 per cent each in the survey results.

Reduce the maximum marginal tax rate; the maximum marginal income tax rate for individuals is 30 per cent, which is on the higher side compared with other countries, said nearly 82 percent of the respondent.

However, the Government could consider a reduction in peak rate from the current 30 per cent to 25 per cent. Further, the peak rate should be attracted at a higher income slab of Rs. 10 lakh (as compared to the current limit of Rs 8 lakh).

About 72 percent of the respondents said the standard deduction for salaried employees should be revived. Standard deduction is not a personal allowance but was earlier given as a lump sum for meeting employment-related expenses such as on conveyance, books, and so on.

Salaried employees should not be deprived of standard deduction from their salaries when professionals/businessmen are eligible for deduction of expenses incurred for earning their income.

With increasing healthcare costs, the existing tax free limit of Rs 15,000 should be increased to Rs 50,000, the same also needs to be considered in the Budget, said majority of the respondents.

The transportation allowance granted by the employer to his employee for commuting between the place of work and residence is tax-free to the extent of Rs 800 per month. This limit was fixed more than a decade ago, and definitely needs to be revised upwards to at least Rs. 3,000 per month, given the rising commuting costs in India.

Additional benefits related to housing, an individual is permitted deduction for interest on loan for a self-occupied property only up to Rs. 1.50 lakh. This limit has not been revised for a long time while property prices have increased manifold.

The Government should consider increasing this limit to Rs three lakh. This would have a two fold impact of not only reducing the taxable income of an individual but also boosting demand for the housing sector, added majority of the respondents.

Over 72 percent of the respondents said the government should also increase the aggregate deductible limit of Rs 1 lakh to Rs 3 lakh as the same would encourage long- term saving by tax payers and enhance availability of low cost funds for the government to meet its long- term development needs.

Investments in infrastructure bonds are currently allowed as a deduction up to Rs. 20,000. These bonds have proved to be quite popular and the limit should be increased to Rs. 50,000, considering that government needs massive funds for the development of infrastructure sector and also the lock period be reduced to three years, added the respondents.
Nagoa Grande at Goa opens for business and leisure travellers .

Will he walk the tight rope ?

Aneesh Srivastava, CIO, IDBI Federal Life

THE Indian economy is hit by the "European Dilemma" of need for austerity with growth. High crude prices and lack of political will to pass on the hike in crude prices, other food and fertilizer subsidies to the customer has put a severe strain on the already stretched government finances. Policy paralysis, high inflation and hence rising interest rates have resulted in an investment-led slowdown in economy.

Hence, fiscal austerity on one side and reformist budget supporting growth on the other becomes the need of the nation and this makes the budget exercise extremely challenging. Recessionary global economic environment makes this task even more difficult. The Political desire to have a populist approach to public finances, despite knowing economic consequences, has become stronger post the recent debacle of ruling UPA II in state elections.

Stark deviation in budgeted & expected numbers of fiscal deficit, divestment, GDP growth, government borrowings & subsidies for current financial year has made a mockery of the budgeting exercise weakening the credibility of the Finance Minister. In the coming Union Budget, market participants would not only like to carefully watch these numbers but also the approach to achieve stated numbers so as to regain some confidence in the sanctity of the budgeting exercise.

In the current environment, 7percent -7.25 percent GDP growth assumption for budgeting with a 6.5 percent of inflation expectation (nominal growth assumption of 13.5 percent to 13.75 percent ) would be most reasonable and any number beyond this would need supporting policy decisions. Market is hoping against the hope to have a 3 to 5 year road map for fiscal consolidation knowing very well that fiscal austerity road map would be difficult to comply with given the propensity of ruling parties to be extravagant immediately before the general elections which are due in 2014.

Similarly, any projection of fiscal deficit of more than 5.25 percent of GDP would not be liked and any number below 5 percent would be looked at with skepticism. Rollback of fiscal stimulus of 2 percent of excise duty given few years back is part of the general expectation and hence would not be taken negatively. Any announcement related to loan waiver, farm waiver, food security bill etc should best be avoided.

Long pending reforms like GST, Land Acquisition, Mining Bills, Fuel Price Deregulation and progress on DTC & GST, FDI in Insurance, Retail, and Aviation are important but evolving a consensus among the various political parties would be a challenge. Market also expects initiatives in the power sector to support the ongoing reforms in this sector, boost to agriculture and housing sector and policies addressing supply-side bottlenecks of agriculture produce. Government initiatives to restore investment climate for long term sustainable growth would also be closely watched.

India's political landscape is changing rapidly and small & regional parties are gaining dominance thereby putting a strain on the national level policy making and hence building a consensus for any reform or initiative would become an uphill task. Perhaps time has come for India to pay the price for democracy.

‘CUT EXCISE DUTY ON BRANDED GARMENTS TO 1%’

Thesynergyonline Economic Bureau

NEW DELHI, MARCH 09 :
LEAD chamber ASSOCHAM on Friday called for fiscal relief to the textile and clothing industry by reducing 10 per cent excise duty on branded garments to one per cent in line with 130 other items on which a similar levy was imposed in the previous Union Budget as a pre-cursor to the Goods and Services Tax (GST).

The Rs 1.5 lakh crore industry providing direct employment to 60 lakh people has witnessed lowering of growth by 25 to 30 per cent due to hike in excise duty, rising material and labour costs, and increase in interest rates.

“There has been a strong consumer resistance against increase in prices, resulting in a significant drop in demand, forcing retailers to resort to extended discounting and creating further stress on margins that are already under severe pressure,” said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a pre-Budget memorandum to the finance ministry.

Sampling costs should be considered as part of research and development expenses, and thus qualify for expenditure deduction under section 35(2AB) of the Income Tax Act. Besides companies, this deduction needs to be extended to partnership firms and sole proprietorships as well.

Due to growing consumer class, rising disposable incomes and arrival of international brands, the domestic market size is expected to reach Rs three lakh crore by 2017 with direct employment opportunities for more than 70 lakh workers.

ASSOCHAM said the domestic branded apparel industry has suffered badly due to ten per cent excise duty and – despite advancing and prolonging discount offers to offload existing stocks – continues with Rs 1,400 crore worth of inventory.

It said reducing the excise duty to one per cent will provide relief to the industry, pave way for rebuilding the growth sentiment and be in line with rollout of the GST.

CALL FOR POLICY TO ATTRACT PRIVATE INVESTMENT

Thesynergyonline Economic Bureau

NEW DELHI, MARCH 08 :
EFFECTIVE aggregation of land through land leasing will improve availability of land, access to capital, technology and inputs to farmers, recommended the Confederation of Indian Industry in its pre-Budget memorandum for the agriculture sector. The industry body called for a land leasing policy to be put in place by state governments.

 “For GDP to increase at 8-9 per cent, the agriculture sector needs to grow at more than 4 per cent.  To increase productivity in the entire agri and food supply chain, incentivising corporate investments in modern farming techniques, provision of scientific agri inputs and agri extension must be incentivised,” said Mr Chandrajit Banerjee, Director General, CII.
 
The agriculture sector suffers from shrinking land area, soil degradation, declining water resources and technology fatigue. The majority of land holdings are less than 2 acres. Apart from fiscal incentives, a conducive policy environment is a must for attracting the much needed private investment in the sector, he said.

“Today, large-scale investments continue to remain minimal in the agriculture sector due to a variety of regulatory and policy constraints,” added Mr Banerjee.
 
Other key policy suggestions from CII include: 
 
●   Exemption of perishables such as fruits, vegetables, fishery produce, etc from the provisions of the APMC Act to give farmers the freedom to sell according to choice. Funds for agricultural marketing should be made available only to those states who have undertaken substantial reforms in APMC.
●  Large investment, including FDI, should be encouraged in Organized Retail, with strong backward integration that will help farmers increase their income.
● Inclusion of all advances to the agriculture and food processing industry under the category of Direct Agri Priority Sector Lending (PSL), without any limitation on the size of investment on plant and machinery
 
Further, CII recommends a 200 percent weighted deduction for R&D to raise public and private investment in technology.

The Budget should allocate funds for the establishment of Seed Banks at regional and local levels, Farm Equipment Banks at least one in each district, and Centers of Excellence in every fruit or vegetable cluster in PPP mode.
 
For reducing wastage and increasing efficiency across the agri supply chain, Mr Banerjee said that extending a 10 year tax holiday benefit under section 80 I(A) to the agri and food retail sector will help address the spiralling food inflation levels.
 
The definition of infrastructure should be extended to include rural and agri infrastructure like farm collection and processing centers, rural training centers, agri clinics, water harvesting facilities, green houses etc.  

Also, there is a need to create a Development Fund on the lines of sugar development fund to give a boost to research, processing, storage/infrastructure projects in the agriculture and food sector.
 
CII stated that in order to encourage mechanization under the new GST, tractors should continue to enjoy the exemption from CGST (Excise Duty) and the SGST (VAT) should be levied at concessional rate of 4 percent . Also all components and inputs for manufacture of tractors should be exempted from excise duty so that full benefit of excise exemption can be passed on to farmers.
 
In order to give a boost to the food processing segment, the deduction u/s 80IB (11A) needs to be extended to existing units engaged in processing, preserving & packaging of fruits and vegetables.

‘

Increase tax holiday to 10 years

Thesynergyonline Economic Bureau

NEW DELHI, MARCH 03 :
INDUSTRY body ASSOCHAM today called for increasing the tax holiday period for highly capital intensive oil and gas exploration industry which has a long gestation period and is strategically important for India.

 Provision of section 80-1B (9) of the Income Tax Act should be amended to extend the period of seven years of tax holiday to 10 years and to allow flexibility to companies involved to chose the period during initial 15 year period of operations.

 In the initial seven years, companies have large expenditure to set off and hence the actual benefit of tax holiday does not reach them, said The Associated Chambers of Commerce and Industry of India (ASSOCHAM). This period is less than the tax holiday period available to companies in infrastructure sector like power generation and distribution.

Given India’s energy requirements, the sunset clause for commencement of refining should be extended by a year to March 31, 2013. “It is expected that extension of tax holiday will benefit refining companies starting operations in 2012-13 and the benefit be passed on to consumers,” said president Rajkumar Dhoot in a pre-Budget memorandum to the finance minister.

It is important that expenditure for drilling and exploration activities be treated as the same as research and development expenditure, and weighted deduction of the actual expenses incurred by the assessee is allowed.

Mr Dhoot said there is need to increase depreciation rate for tax deduction under income tax to improve internal accrual for replacement of assets in the current difficult financial market and volatile crude oil prices. Inverted duty structure in case of certain industries should be removed.
 
The current rate of excise duty needs to be retained in view of falling industrial growth. Tax refund procedures for exporters of goods and services must be simplified and authorities should ensure that refunds are made within a reasonable time period.

 There is also need to remove double taxation of same tax-able items under value added tax like in case of copyright, software, right to use goods and immovable properties, said ASSOCHAM.

 It said section 73A restricts the claim of adjustment of loss of specified business from profits of other businesses. This discrimination needs to be removed.

FM CALLS FOR 9%+ SUSTAINABLE GROWTH

Thesynergyonline Economic Bureau

NEW DELHI, FEBRUARY 03 :
THE Union Finance Minister Mr Pranab Mukherjee has said in order to achieve the objective of inclusive growth, we need to have 9 plus growth rate for a sustainable period.

He said that in order to ensure that everybody gets due share of development, it is necessary that the benefits of the various development programmes reach the targeted beneficiaries in the given timeframe. Mr Mukherjee was addressing the representatives of Indian business and trade here on Friday.
at a meeting called by him as part of the pre-Budget consultation process.

Mr Mukherjee said that there are various challenges before us including higher growth, keeping inflation and fiscal and revenue deficit to manageable level among others which we all have to address collectively.

He gave a brief account of micro and macro economic situation to the business and corporate leaders before soliciting their suggestions on vital economic issues. About 20 representatives of industry and trade sector attended the today's meeting. Thos who attended the today's meeting included Mr B. Muthuraman from CII, Mr R.V. Kanoria from FICCI, Mr R.N. Doot, Assocham, Mr Y.C. Deveshwar, ITC , Mr Nitin Paranjpe, Hindustan Unilever., Mr Tulsi R. Tanti, Suzlon Energy ., Mr B.P. Rao, BHEL, Dr. Naresh Trehan, Mdeanta, Mr M. Rafeeq Ahmed, FIEO, Mr Som Mittal, Nasscom, Mr Suman Jyoti Khaitan, PHD Chamber of Commerce & Industry, Mr Joginder Kumar, Federation of Tiny & Small Industries of India and Mr R.K. Sonthalia, Export Promotion Council for EOUs & SEZ among others.

The representatives of business and trade sector gave various suggestions for consideration of the Finance Minister. Some business leaders suggested that there is a need for amendment of Fiscal Responsibility and Budget Management (FRBM) Act with a roadmap for reduction in fiscal deficit in the next five years which would help in infusing a sense of discipline in raising revenues and containing expenditure.

Most of the business leaders were in favour of reduction in interest rate at least by 50 basis points to send the positive signal to the market, industry and the corporate world at large as well as to boost the investment sentiments. It was also suggested that service tax base may be widened with a negative list and to exempt infrastructure sector companies and SEZ units from MAT.

It was suggested to shift to accrual based budgeting from cash based budgeting for better outcome of money spent. It was suggested to revisit concept of dividend distribution tax.

Disinvestment should come back on the agenda of the Government alongwith a roadmap. In order to improve health care, it was suggested that a benefit of tax deduction of Rs.10,000 be given to the citizens for preventive health check-up.

It is better to invest in health care than curing the disease In order to boost the renewable sector, it was suggested that accelerated depreciation be continued for another decade for SMEs in this sector.

It was also suggested that to achieve 8-9 GDP growth, agriculture sector should also grow at 4-5 percent to feed more than 1.2 billion people of India. In order to achieve this, modern farming techniques, Model Land Leasing Act, legalising land leasing in all States, encouraging R&D, setting-up of National Mission on Farm Mechanisation in PPP mode among others were suggested.

It was also suggested that fruits, vegetables, milk and other perishables should be de-notified from APMC list. In order to improve the tax administration system and better generation of revenue, it was suggested to make tax evasion difficult and bring more items under tax net, move to e-invoicing system, implement DTC in its entirety and clear funds held-up in tax litigation and disputes among others.

To boost exports, it was suggested that interest rate for MSME sector be kept at 7 per cent and for others at 9 per cent or subvention should be provided to all sectors of exports at least till March 31 , 2013. Exports to be included in priority sector lending by the banks.

It was also suggested that tiny and small sector units be treated at par with agriculture sector and no service tax be charged from them.

It was also demanded that duty on readymade garments be also reduced or withdrawn. Similarly, agro-based units be exempted from excise duty while off-set printers be exempted from service tax.

The Minister of State for Finance, Mr Namo Narain Meena, Finance Secretary, Mr R.S. Gujral, Advisor to FM, Ms. Omita Paul, Secretary (Expenditure) Mr Sumit Bose, Secretary, DEA, Shri R. Gopalan, Secretary (Financial Services), Mr D.K. Mittal, Secretary (Disinvestment), Mr Mohd. Haleem Khan, Secretary, DIPP, Mr P.K. Chaudhary, Chief Economic Advisor, Dr. Kaushik Basu, Chairman, CBDT, Mr Laxman Das, Chairman, CBEC, Mr S.K. Goel, Addl. Secretary (Budget), Shri Shaktikanta Das and Addl. Secretary and FA (Commerce) Shri Rajan Katoch were also present at the meeting.

Thesynergyonline Corporate Bureau

NEW DELHI, JANUARY 03 :
O P Kapoor, Dy.Director General, Export Promotion Council for EOUs and SEZs (EPCES) has informed that EPCES attended a pre-Budget consultations meeting with Mr Pranab Mukherjee, Finance Minister on Friday here.

The meeting was attended by Mr Namo Narain Meena, Minister of State (EB&I), Dr Kaushik Basu, Chief Economic Adviser to the Finance Minister, Ms Omita Paul, Adviser to Finance Minister, Mr R S Gujral, Finance Secretary, Mr R. Gopalan, Secretary (Economic Affairs), Ministry of Finance, Mr D.K. Mittal, Secretary, Department of Financial Services, Ministry of Finance, Mr Sumit Bose, Secretary (Expenditure), Mr S.K. Goel, Chairman, CBEC, Mr Laxman Das, Chairman, CBDT, senior officers of Ministry of Finance, Chairmen of Export Promotion Councils Organisations, CII, FICCI, Assocham etc./ etc.

Mr R K Sonthalia, Immediate Past Chairman, EPCES informed that there are 6000 operational EOUs and SEZs spread all over India with a contribution of 34 percent to national exports.

During 2010-11, the total exports from this sector was Rs 3,75,692 crore. Out of which, the exports from SEZs was Rs 3,15,868 crore.

The exports from SEZs in April-December, 2012 is Rs.2,60,973 crore. SEZ sector is providing employment to 8,15,308 persons in India with an investment of Rs.2,49,631 crore.

Mr R.K. Sonthalia, Immediate Past Chairman, EPCES further informed that after the withdrawal of income tax benefit under section 10(B) of the Income Tax Act beyond March 31, 2011, a large number of EOUs have been debonded/exited from the EOU Scheme and no fresh investments are being made in the Scheme.

He informed the Finance Minister that Ministry of Commerce & Industry has submitted recommendations of the Committee set up to reviewing and revamping of EOU Scheme to Ministry of Finance.

He urged the Finance Minister that the recommendations of the Committee be considered favourably since EOU Sector has contributed immensely in terms of exports, manufacturing, investment and generating employment.

As regards SEZs, Mr Sonthalia highlighted the following issues/suggestions for incorporation in the forthcoming Union Budget 2012-13:

After the imposition of MAT on SEZ units and SEZ Developers, the growth in the SEZ exports has declined steeply to only 17 percent in the first 3 quarters of current fiscal year as compared to 47 percent in the corresponding period of previous year.

SEZ Act was enacted for the purpose of providing long term stability and continuity of the Scheme. Altering the provisions of SEZ Act within 5 years of implementation of the SEZ Act is sending a very wrong signal to the investors, internationally as well as in the domestic market. There is need to reconsider the imposition of MAT on SEZ units and SEZ developers.

Unless SEZ units and DTA units are given uniform benefits for export activity, no entrepreneur shall venture to set up a manufacturing unit in any SEZ because it is carrying inferior commercial viability compared to manufacturing units set up in DTA unit of the same product specifically for exports. It needs the attention of Revenue Department. Like DTA exporter if using duty paid inputs are entitled for DBK under all industry rate on the exports of their product but SEZ units are not entitled to claim DBK @ All Industry Rate if same product is manufactured out of duty paid inputs and exported.

Jawahar Lal Nehru National Solar Mission is an initiative of Government of India to make India as self-reliant in the field of solar energy. It is submitted that funding of such solar projects, Ministry of Finance should issue directions to RBI that there should be specific guidelines and specific percentage from total funds for power project should be prescribed for solar power projects under JNNSM so that there would be no problem in getting funds from banks. Funding to these projects should not be counted under general power project funding. It is essential that this sector alone needs funding of Rs.15,000 crore to Rs.20,000 crore every year, which will further be increased in the years to come.

We are entering into number of multi-lateral and bilateral agreements by which we are extending zero duty or concessional duty facility. From SEZ to DTA such imports should also be subjected to this treatment.

Mr Mukherjee assured the captains of trade and industry that their valuable suggestions/issues relating to taxation and policy would be looked into while formulating Union Budget for 2012-13 to be announced in March, 2012.

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.

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