Tax experts want FM to bite bullet, roll back stimulus
February, 16th 2010
With less than a fortnight to go for the Budget, tax experts urged Finance Minister Pranab Mukherjee to bite the bullet and roll back stimulus, a suggestion which did not find favour with the India Inc.
Describing stimulus as a "short-term life support" measure, global consultancy firm KPMG Executive Director Vikas Vasal said, "(they) cannot continue forever. This is one area where timing may never be considered right; however, somewhere down the line the government has to bite the bullet."
However, making a case for the continuation of stimulus, India's apex industry chamber FICCI President Harsh Pati Singhani said the economy is still not out of woods and will continue to need government support for some more time.
"We would... expect the continuation of stimulus packages for another year or at least six months till October 1. This, in our view will considerably help us in improving the economy further," he added.
Following the global financial crisis, which was triggered by the collapse of Lehman Brothers in September 2008, the government provided three stimulus packages to the industry entailing a revenue sacrifice of Rs 1.86 lakh crore.
The stimulus, which include steps like slashing taxes rates and raising public expenditure, is slated to push up fiscal deficit to 6.8 per cent of the GDP in 2009-10 from 6.2 per cent a year ago. Mukherjee will be required to take steps to contain fiscal deficit when he unveils the Budget for 2010-11 on February 26.