New Delhi, May 17 (Inditop) Tabling a regular national budget will top the economic agenda of the next government, with India Inc hoping for fair doses of policy reform since the ghost of Left support – the main hurdle to change – has finally been stamped out by the electoral verdict.
The Left parties, which had propped the Congress-led United Progressive Alliance (UPA) government for over four years, had blocked a number of reforms such as the entry of global chains in multi-brand retailing, opening up of the pension sector and hike in foreign equity in insurance.
And the corporate sector is hoping all these will get a firm push forward – particularly since the country is facing a slowdown, with exports taking a severe beating, industrial output registering a decline and a general fall in domestic demand.
“Pensions, insurance, banking, divestment, labour, private participation in defence and retail are key areas crying out for reforms,” said Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry (FICCI).
“The time has come to respond swiftly and decisively to the changing economic environment and bring back the economy to the path of at least 7 percent growth in the next six months,” Singhania told Inditop.
“The results will certainly have a positive impact on the markets as they were hoping for stability in the next government,” said Arvind Mahajan, executive director with leading global consultancy KPMG.
“Given that Left support may not be required this time, the Manmohan Singh government is expected to be more reformist than in the past,” Mahajan told IANS, referring to constant roadblocks when the Left parties were supporting the UPA from outside.
Tax sops, too, are on top of corporate India’s agenda to tide over the ongoing economic crisis.
The ailing export sector, which in October witnessed a decline for the first time in a decade and missed the target of $175 billion, has sought income-tax exemption for some five years.
“Since the export sector is an employment-oriented industry, we should be exempted from paying income tax for five years,” said A. Sakthivel, president of the Federation of Indian Export Organisations (FIEO).
According to the federation, promoted by the commerce ministry, the export sector lost about 500,000 jobs during the third quarter of the last fiscal.
Another sector that has been a significant contributor both for fresh jobs and exports in the past, the information technology industry, wants service tax schemes to be simplified and sops for exporters.
“We would appreciate a uniform tax regime with a common goods and services tax,” said Som Mittal, president of the National Association of Software and Service Companies (Nasscom).
For the automobile sector, which has had a good run in the past decade, continuity in policy is the main plank. Beyond that, the representative organisation – the Society for Indian Automobile Manufacturers (SIAM) – does not have a long wish list.
“We want the next government to continue with the auto policy spelt out in 2002,” said SIAM director general Dilip Chenoy, adding it calls for automatic approval of foreign investment up to 100 percent with no minimum investment criteria.
Similarly, the gems and jewellery sector, which has seen some large-scale job cuts in recent months, also has its own set of demands. It accounts for exports worth $21 billion and employs some 1.3 million people, of which some 800,000 people are in the diamond cutting and polishing trade.
“The next government should put more stress on this industry, especially to help workers who were laid off,” said Vasant Mehta, chairman of the Gems and Jewellery Export Promotion Council.
The Associated Chambers of Commerce and Industry of India (Assocham) said the budget should introduce the general sales tax system and remove irritants in the value-added tax regime.
“Service tax has become a massive money-spinner for the government. It must be recognized that any further increase in taxation rates would dissuade compliance and compel tax avoidance,” Assocham said.
rounak