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Economists want this year's Budget to restore investor confidence in India's growth story.
Pitching for an investor-friendly Budget, all the nine economists who met the Finance Minister, Mr Pranab Mukherjee, on Wednesday said it should be a “policy Budget” rather than only a statement of accounts.
Their suggestions included decontrol of diesel, increase in excise duty on diesel cars if subsidies on diesel cannot be pruned, infrastructure status for aviation and township housing.
Some participants also called for abolition of securities transaction tax besides incentives to tackle environmental problems.
Among the other suggestions were removal of minimum alternate tax (MAT) on units in Special Economic Zones. It was also felt that the MAT rate should be half the current effective rate of income tax. There was also a suggestion for extending the tax holiday under Section 80 (IA) for six more years.
There was also strong support for a negative list approach to services tax, said Dr Rajiv Kumar, Secretary General, FICCI. Many economists made a case for allowing foreign direct invest in multi-brand retail.
Deficit scene
Meanwhile, Dr M. Govinda Rao, Member of the Prime Minister's Economic Advisory Council, said that the fiscal deficit could rise to 5.6 per cent of GDP for the current fiscal, against a target of 4.6 per cent of GDP.
The country's fiscal deficit in the first nine months of the current fiscal stood at Rs 3.81 lakh crore, which accounted for 92.3 per cent of the Budget target of Rs 4.13 lakh crore.
Given the fiscal situation, there should be a strong attempt to achieve fiscal consolidation, the economists said. However, nobody mentioned taking the excise duty to pre-crisis level, Dr Kumar said.
At the interaction, Mr Mukherjee said that headline inflation would be between 6 and 7 per cent, while the growth rate may be 7 per cent plus.
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