The Hindu Business Line : `A holistic view necessary to take the economy forward'

Taking Stock: (From left) Mr S. Aravind, president, MADITSSIA; Mr B.T. Bengera, Managing Director, HI-Tech Arai; Mr S. Radhakrishnan, Chairman, Tamil Nadu Mercantile Bank; Mr D. Sampathkumar, Associate Editor, Business Line; Mr P. Selvaganesh, Additional Director of Investigation, Income Tax, and Mr S. Rethinavel, President, Tamil Nadu Chamber of Commerce and Industries. - K. Ganesan

Madurai , March 6

The maiden Business Line Panel Discussion `Budget Talk 2006', held here on Saturday, reflected the growing awareness about the Budget as an instrument of change in the non-metro cities too, with the public, including students, turning out in good number.

Anchoring the discussion to a full capacity audience at the Tamil Nadu Chamber of Commerce and Industry auditorium, the Associate Editor, The Hindu Business Line, Mr D. Sampathkumar, outlined the history, rationale and relevance of the annual Budget presentation in the context of distributive justice, triggering latent investment and growth impulses, development of human resources and temporal implications.

The panellists, consisting of Mr S. Rethinavelu, President, Tamil Nadu Chamber of Commerce and Industry; Mr S. Aravind, President, Madurai District Tiny And Small Scale Industries Association; Mr B.T. Bangera, Managing Director, Hi-Tech Arai Ltd; Mr S. Radhakrishnan, Chairman, Tamilnad Mercantile Bank Ltd; and Mr P. Selvaganesh, Additional Director of Investigations, Department of Income Tax presented their views on the Budget. While agreeing that the Budget balanced fiscal consolidation and sent strong signals of continuity and stability in governance, the panellists also voiced their concerns. Mr Rethinavelu said the increase in service tax rate was unnecessary. Unlike the manufacturers, the traders did not enjoy the set-off facility and would suffer a lot. The move towards introduction of the goods and service tax (GST) by April 2010 implied a further increase in the rate and would affect traders and small-scale industries.

Referring to the Fringe Benefit Tax (FBT), he said it affected the cordial relationship between the employer and the employees. The Budget has been silent on the SSI sector and labour reforms. The Government should ponder over these, he said.

Global competition

Mr Bangera said that in the context of growing opportunities and global competition, reduction in prices of items produced has become a major concern of the corporate sector for its survival.

The year-on tax variations did not mean much to them. The corporate sector is dependent on SSI; unless the SSI sector is competitive, the corporate sector cannot be competitive, he said.

While the duty reduction on small cars is welcome, the logic behind the move defied understanding as the counter implications in terms of environment and fuel prices posed significant questions. A similar treatment to the machine building industry could have been more helpful, said Mr Bangera.

Labour reforms

The absence of any move towards labour and legal reforms would hinder the Indian corporate world in facing global competition, he said. While welcoming the larger allocation to the rural sector, he said "there is need for close monitoring and provision for this could have been made.". It is time to tax agriculture, he said. The Finance Minister could have initiated steps to ensure provisions for the corporate sector to take up acts of social responsibility.

Mr Aravind, lamenting the neglect of the SSI sector in the Budget, said the sector did not expect subsidies but had wanted incentives to sustain itself.

A separate Bill on small and medium enterprises is long overdue and the Budget has belied their expectation, he said. At least, taking into consideration inflation, the limit for the sector, fixed years ago, could have been raised to Rs 3 crore. He sought the import of technology for the SSI sector and the removal of FBT.

Mr S. Radhakrishnan said that while each sector may have individual difficulties, a holistic view is necessary to take the economy forward. He said the 80C benefit extended to deposits with banks would enable them to perform better. A reduction in the lending rate for different sections is not in the interest of the economy, he said. Acceleration of the NPAs would lead the banks to suffer.

The discussion was sponsored by the Tamilnad Mercantile Bank Ltd, Tuticorin in association with Ramco, Rajapalayam. The co-sponsors were Hi-Tech Arai Ltd., Madurai and Lovely Offset Printers, Sivakasi.