CII expects Budget to have no change in indirect taxes

Business chamber Confederation of Indian Industry (CII) is looking forward to measures that will encourage investments in the country and hopes the government will not raise indirect taxes from the current levels.

"With the economy having recovered steadily from the downturn, the industry is looking for a new phase of steady investment and growth.

The Budget can provide policy direction by announcing measures to encourage investments, which will offset the negative impact of rising interest rates," CII Director General Chandrajit Banerjee said in a statement.

While making reference to high inflation rates, Banerjee said he expected no hike in indirect taxes.

"Given the inflationary environment, indirect tax rates are maintained at current levels and aligned with the proposed rates under GST (goods and services tax)," Banerjee said.

Food inflation was reported 11.49% for the week ended on February 12.

Further, he said the Finance Minister could also use this opportunity to reform agricultural markets so that the episodic food inflation can be avoided.

"Investment in agriculture and rural infrastructure is required to be stepped up in order to improve the productivity of crops," Banerjee said.

Pointing to the latest Economic Survey, he said that the roadmap towards fiscal consolidation should be maintained.

"Any increase in the deficit could put pressure on interest rates to increase and negate any positive impact of the policy announcements," Banerjee said.

The recent Economic Survey has pegged the fiscal deficit for 2010-11 at 4.8%, lower than the Budgetary estimates of 5.5%, on the back of higher realisation from 3G spectrum auction and buoyancy in revenues.

India's fiscal deficit, which had ballooned to 6.3% of the GDP in 2009-10 in view of the stimulus spending worth billions of dollars to combat global financial meltdown, is pegged at 5.5% for the current fiscal.

In the Budget 2010-11, Finance Minister Pranab Mukherjee had estimated fiscal deficit to be Rs 3,81,408 crore.