Industry body Assocham on Thursday asked the government to bring down taxes such as corporate and service tax to boost the demand side, but said prices were being determined by market forces. Assocham, which convened the meeting of its workin g group to take stock of the situation emerging due to global economic meltdown, demanded that banks must provide more liquidity to the Small and Medium Enterprises (SME).
There should be a review of taxes, because this tax regime was during the boom time. Today we need a special one time tax concessions,'' said Mr Sajjan Jindal, President, Assocham. He said the tax concessions could be in the form of investment allowanc e for inflow of more funds or reduction in corporate tax to 25 per cent from 33 per cent. The chamber would present a paper to the Finance Minister and task force constituted by the Prime Minister.
We must provide more liquidity to the SME sector... Banks must allot 20-25 per cent specifically for the SME sector,'' Jindal said. Lauding the government for taking a number of steps to pump liquidity into the system, Jindal said banks have surpluses but there is a crisis of confidence'' which needs to be improved. Asked whether industry would cut the prices as suggested by Finance Minister P Chidambaram, Jindal said: The prices are dependent on demand and supply scenario. Prices are coming down i n any way due to slow demand and it is likely to come down further''.
The Assocham President also said different ministries should accelerate funding for infrastructure projects to boost demand. Stating that real estate and housing are key sectors of economic development, Singh said funds should be made available at lower interest rates.