The Hindu Business Line : Survey sees CEOs bullish on GDP growth

The proposed tax on cash withdrawals of above Rs 10,000 is not an effective tool to keep a check on the black market, according to majority of the corporate heads.

New Delhi , March 6

INDIA Inc is positive on the prospect for growth of the GDP, in spite of the FRBM (Fiscal Responsibility and Budget Management) goals being put on hold.

This was one of the key findings from the CEOs' snap poll that was conducted among the National Council Members of Confederation of Indian Industries (CII). Among the 70 respondents polled, 87 per cent of the CEOs were optimistic that the economy would clock a growth of between 6 and 7 per cent in 2005-06. Fifty-four per cent of the respondents felt that in spite of putting the FRBM goals on a pause the fiscal targets would be met.

The proposed tax on cash withdrawals of above Rs 10,000 is not an effective tool to keep a check on the black market, according to majority of the corporate heads. Ninety per cent of the respondents felt that the proposed new tax would not be effective in keeping a check on black economy, stated a CII statement.

On the issue of dividend distribution tax, 73 per cent of the CEOs felt that the increase in surcharge on dividend distribution tax from 2.5 per cent to 10 per cent would not bring about any significant reduction in corporate tax, in spite of the corporate tax having been reduced to 30 per cent from 35 per cent.

On the fringe tax issue, the respondents were unanimous in saying that the proposal fails to distinguish between routine business expenses and employee benefits, the CII said.

Meanwhile, the respondents were evenly divided on the issue of reduction on depreciation allowance from 25 per cent to 15 per cent, and how it would impact the net outflow of taxes. When seen in the light of the drop in corporate tax rate, 52 per cent of the CEOs felt that there would be no additional outflow of tax.

On the easing of the SLR and CRR norms, the CEOs were confident that this would boost investments and bring down interest rates in the priority sector.

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