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Ambarish Mukherjee

Resources to exclusively fund irrigation projects

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New Delhi Feb. 20 In an unprecedented move, one of the leading industry associations has suggested to the Government to impose an additional one per cent cess on corporate profits in the Union Budget for 2007-08 and use the additional revenue exclusively to fund irrigation projects.

Traditionally, industry chambers are known for seeking various tax concessions before the Budget and not suggest imposition of a fresh levy. The Associated Chambers of Commerce and Industry (Assocham) has written to the Finance Minister to consider imposition of an additional one per cent cess on the profits of both private sector and public sector companies.

This, according to the chamber's estimate, can generate anywhere between Rs 8,000-10,000 crore of extra revenue for the Centre.

Interestingly, the proposal was not there in the pre-Budget memorandum submitted by the apex chamber earlier in January.

According to the Secretary General of Assocham, Mr D.S. Rawat, "The chamber's focus is on growth in the agriculture sector to 5 per cent as that would enable the country to maintain a 9 per cent overall GDP growth. We have urged the Finance Minister for this."

Assocham is of the view that an increase in agriculture growth rate from 3 per cent to 5 per cent would require huge investments in irrigation, which could lead to higher productivity levels.

The chamber has also suggested that the disbursement of the funds collected through the cess should be in consultation with the Planning Commission to the States that need irrigation facilities urgently.

"The cess should be distributed in a fair manner to accelerate the growth of agriculture sector in a fair manner," the Assocham proposal states.

Related Stories:
Assocham's Budget wish-list
Assocham seeks zero import duty on capital goods

More Stories on : Taxation | Industry Associations | Budget

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