To increase investments in infrastructure

Our Bureau

Some suggestions

Purchase tax

on sugarcane, turnover tax and export pass fee on molasses should be removed and sales tax on molasses should be reduced.

Cotton cultivation

should be encouraged and textile parks, special economic zones and export zones should be created.

Chennai, July 24

The Federation of Indian Chambers of Commerce and Industry, which expressed concern over Tamil Nadu's high revenue expenditure and low capital expenditure, has suggested that it opt for public-private partnership (PPP) to increase investment in infrastructure.

Addressing a press conference to highlight the industries' inputs for the proposed industrial policy to be announced by the Tamil Nadu Government, FICCI representatives said that an inherent weakness in the budget is the high fiscal deficit (Rs 7,232 crore) and revenue deficit (Rs 1,129 crore) which means that most of the Government's borrowings would go to revenue expenditure, the day-to-day running of the Government, rather than for capital outlay. Dr D.K. Srivastava, Director, Madras School of Economics, who heads FICCI's industrial advisory panel on macroeconomic issues, said that the Tamil Nadu Government should use its resources to attract more investments from the private sector through a PPP.

A long-term infrastructure development policy was needed, he said.

Briefing presspersons on a presentation made by FICCI to senior Government officials here on Monday, Mr P. Murari, Advisor to FICCI President, said that the expenditure should be restructured to favour capital outlay and incremental revenues should be used for capital outlay particularly in rural development, power, education and public sector.

Mega projects policy

A special mega projects policy was needed to attract new investments by multinational companies.

A high-power committee for evolving a five-year plan to facilitate such projects and monitor implementation needs to be set up.

Traditional industries

FICCI has focussed on the needs of traditional industries in Tamil Nadu, which contribute most to its industrial strength sugar, textiles, leather, agribusiness and food processing and chemicals and fertilisers.

In the sugar industry, purchase tax on sugarcane, turnover tax and export pass fee on molasses should be removed, sales tax on molasses should be reduced and power tariff on cogeneration should follow the Central Ministry's guidelines. Production of fuel, ethanol and cogeneration should be encouraged.

Textile industry

With regard to the textile industry, cotton cultivation should be encouraged, road and rail connectivity improved and textile parks, special economic zones and export zones should be created. A flexible labour policy is needed to meet the needs of the seasonal work opportunity in the industry.

Mr Rafeeque Ahmed, President, FICCI, Tamil Nadu State Council, said that the State Government needs to expedite refunding of export and special subsidies for the leather industry, set up leather parks at hubs such as Ambur, Vaniyambadi, Ranipet, Dindigul and Erode. The leather SEZ by SIPCOT has to be speeded up.

Mr Jitendra Goenka, who is a part of the FICCI committee on agriculture and agribusiness, said that a policy was needed to encourage bio-fuels and agri-biotechnology. Investments in agri-infrastructure, including food parks, export zones and medicinal plants could be through special purpose vehicles and PPPs.

The fertiliser and chemical industry could be encouraged through establishment of a new LNG terminal at Chennai and Tuticorin and expediting southern gas grid to accelerate industrial growth.

(This article was published in the Business Line print edition dated July 25, 2006)
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