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Corporate India on Tuesday urged the Finance Minister, Mr Pranab Mukherjee, to refrain from any further rollback of fiscal stimulus that was granted in three stages after the September 2008 global economic downturn.
It also sought Mr Mukherjee's assurance that interest rates would not climb further as this could affect profit margins and the growth momentum of the economy.
Time is not ripe for any withdrawal of fiscal stimulus, the apex industry associations told Mr Mukherjee at a pre-budget meeting here. However, there are indications that the Government may in the Budget resort to some hike in excise duty as part of its fiscal consolidation efforts.
“World economy is still coming along and growth is still a little shaky in developed countries. We must keep that in mind in terms of our exports as well as investments coming into this country. We have asked the Finance Minister,” Mr Rajan Bharti Mittal, FICCI President, told reporters at North Block in the capital after the pre-budget meeting.
India Inc also sought further opening up of Defence and retail sectors for foreign direct investment.
With the wholesale price index (WPI)-based inflation beyond the comfort levels of the Reserve Bank of India (RBI), there are expectations that the central bank would increase policy rates at its monetary policy review on January 25. Fears over hardening of interest rates have already pushed down benchmark stock indices 3-4 per cent over the last few trading sessions.
Meanwhile, export promotion associations have called for imposition of a tax on foreign portfolio investments into the country, stating that a surge in FII inflows is leading to rupee volatility and thereby affecting the profit margins of the exporting community. “We have urged the Finance Minister to impose Tobin tax on FII inflows,” Mr Aman Chadha, Chairman of EEPC, said.
The Federation of Indian Export Organisations President, Mr Ramu S. Deora, said that he had sought continuation of the interest subvention scheme for export credit for one more year until March 31, 2012. Rupee export credit must be available at 7 per cent and foreign currency based export credit at Libor+ 200 basis points, he suggested.
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