Finance minister Pranab Mukherjee may not tinker with tax rates in Budget 2011-12, but could instead focus his energies on development of infrastructure and stepping up investments in research and development activities.

In his customary pre-Budget meeting with industry captains on Tuesday, Mukherjee expressed concern over rising food prices and sought India Incs help to reduce them. He also ruled out a cut in the direct tax rates, but indicated that the stimulus measures may continue.

Calling on suggestions for sustaining double digit growth in industry and for stepping up the growth of manufactured exports, the minister said, The government is conscious of two major concerns relating to the pace of development of infrastructure and investments in research and development, which have a direct bearing on the productivity of Indian enterprise.

He also sought reasons from India Inc on why corporate tax collections are not keeping up with the expected trend.

The finance minister was worried about food inflation touching 18.32 per cent. He asked for industry help. But he may not reduce taxes (rates) since fiscal deficit is also high, former Assocham president Venugopal Dhoot said after the meeting, adding, It appears that the finance minister at least agreed for continuing the stimulus (in 2011-12 Budget).

Echoing similar views, Ficci president Rajan Bharti Mittal said, We have asked to maintain excise duty at the current level. Let the interest rate not harden up because industry is in investment mode so that those investments does not become unviable. While the Centre had introduced three fiscal stimulus packages in the wake of the global financial crisis in 2008, it began to withdraw these measures in the last Budget after the domestic economy started showing signs of recovery. Subsequently, it hiked the median rate for central excise duty by 2 per cent to 10 per cent in Budget 2010-11.

The over-three-hour long meeting, which was attended by Tata Group chairman Ratan Tata and leaders of industry chambers including Ficci president Rajan Mittal, CII president Hari Bhartia, Assochan president Dileep Modi and Nasscom president Som Mittal , also threw suggestions for cuts in corporate tax and minimum alternate tax rates.