Budget 2011: Strong case for continuation of stimulus package: ASSOCHAM Survey
February, 08th 2011
In the view of continuous elevated inflation and increase of price of commodity across globe, has made out a strong case for continuation of stimulus package so that the growth momentum is not spiked, says a random Survey of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
In India Inc.'s Pre-Budget Expectations Survey conducted under aegis of The Associated Chambers of Commerce and Industry of India (ASSOCHAM) with participation from its 1000 CEOs were consulted by ASSOCHAM Research team concludes that Finance Minister would focus more on to sustain current growth momentum for which continuation of fiscal concessions would have to be retained.
85% of CEOs belonging to large, micro, small and medium enterprises polled in ASSOCHAM Survey held that stimulus package for textiles, gems & jewellery, construction and real estate, cement and steel etc. should continue for the next fiscal.
In view of the unprecedent inflation particularly the food inflation, the government must increase the personal income tax exemption limit from the existing Rs. 1.6 Lakh to atleast Rs. 3 Lakhs to give adequate relief to the larger sections of the society, added the majority of the CEO's.
Remaining 160 executives, however, held that the government has already dropped sufficient hints by projecting GDP growth @ 7.5% for current fiscal that government has already made up its mind for gradual and measured phase out of stimulus package with a view to keep the fiscal deficit under control to 5.5%.
About 240 CEOs are of the view that the procurement policy where by the government and PSU's may be directed to source their goods & services atleast to the extent of 20% from MSME sector. According to them, government may make budgetary allocations for instituting a Technology Fund for MSME sector as part Task Force recommendations.
210 CEOs have suggested that real estate still needs government to continue doles and therefore in a bid to spur up demand for dwelling units, ceiling of interest exemptions limit on housing loans should be raised to Rs.3 lakh from existing Rs.1.5 lakh. This is necessary as real estate has yet to come out from recessionary modes, they felt.
Over 300 CEOs have demanded that the Finance Minister should permit Pension Funds to invest 10-15% of their funds in Infrastructure projects from 2011-12 in a phase manner. They have also suggested that the government should re-consider for refinancing of existing rupee loans through External Commercial Borrowings (ECBs) be permitted for such projects based on interest cost advantage.
Besides, majority of the CEOs also pressed for larger and faster disinvestment in public sector undertakings, proceeds of which should partly be to fund infrastructure augmentation in PPP projects to help India grow and achieve intended growth rate of close to 9% in next 2-3 years.
They also called for rationalization of Dividend Distribution Tax (DDT) and recommended that it should be payable at one level only so that cascading effect is minimized. According to them, Infrastructure development business often requires a multi-tier corporate structure with a holding company at the top which is generally a listed entity.