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FICCI outlines measures to boost GDP growth

Our Bureau

New Delhi , Dec. 22

TO sustain and enhance 8 per cent GDP growth rate, the Federation of Indian Chambers of Commerce and Industry (FICCI) has called for conducive policy for manufacturing sectors.

A nine-member high-level FICCI delegation led by President, Mr Yogendra K. Modi, on Wednesday met the Revenue Secretary, Mr K.M. Chandrashekhar, and submitted a comprehensive note.

Advocating a new integrated food law, the chamber urged abolishing the Agriculture Produce Marketing Act, Essential Commodities Act and the Mandi Tax, as well as reduction in the multiplicity of laws that govern the food-processing sector.

FICCI has suggested curtailing wasteful expenditure by proper targeting of subsidies exclusively to the poor and implementation of the recommendations of Geethakrishnan Committee on Expenditure Reforms and the Fifth Pay Commission.

Some of the other issues which the chamber wanted the Government to focus on were formulation of a national plan for e-governance, reactivating project financing, promoting investment in labour-intensive exports, encouraging labour intensive manufacturing and raising FDI caps for insurance and telecom sectors to 49 per cent and 74 per cent, respectively.

The note submitted by FICCI emphasised the need for a range of growth and revenue imperatives to raise industrial and services growth rate to over 11 per cent and agricultural growth to 4 per cent. Such imperatives, it argued would accelerate the overall GDP growth to above 8 per cent and help in achieving the 10 per cent growth.

On the direct taxes front, FICCI suggested bringing down the effective corporate tax rate for domestic companies from 36.6 per cent to 30 per cent, and ultimately to around 25 per cent - the average ASEAN tax level - during the coming years.

Some of the other measures recommended to the Revenue Secretary included: remodelling of income slabs for tax rates for individuals. The chamber further suggested that surcharge on income tax should not be continued merely for meeting financial requirements of a general nature.

It reiterated its demand for withdrawal of MAT or at least, restoration of tax credit facility.

The chamber also urged for bringing agriculture income, especially from commercial crops, within the taxation net.

On indirect taxes, FICCI suggested that while introducing VAT from April 1, 2005, it should be ensured that State legislations and rules are uniform across all States and introduced simultaneously all over the country.

Further, it has also called for constitution of a committee to decide on the abatement rate for various items, with representatives from chambers of commerce and trade associations as its members, a three-tier structure of import duty, and ensuring that the education cess does not exceed 2 per cent. The chamber suggested expanding the service tax net.

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