FM may not cut taxes; continue with stimulus: industry

Finance Minister Pranab Mukherjee is not in a mood to cut taxes but may continue with stimulus in the Budget for 2011-12, feel industry representatives who met him for pre-Budget interactions.

"Finance Minister is not in a mood to cut taxes because it will affect fiscal deficit targets...It appears that FM has at least agreed to continue with stimulus packages," Videocon Chairman Venugopal Dhoot told reporters after a three-hour long meeting.

Echoing similar views, Ficci President Rajan Bharti Mittal said, "we have asked to maintain excise duty at the current level... Let the interest rate not harden up because industry is in investment mode so that those investments does not become unviable."

He also suggested for corporate tax reduction from the existing level of 30 per cent to 25 per cent.

Industry chamber Ficci also made a recommendation for opening up defence and retail sectors for foreign players.

"We have suggested for opening up of sectors like defence and multi-brand outlets," Mittal added.

In order to help the industry from the aftermath of the crisis, the government and the RBI provided a stimulus to the economy to tide over the turbulence. The government reduced tax rates and raised public expenditure, while the RBI released more funds into the system.

In view of the economic recovery, Mukherjee had started the process of withdrawal of stimulus by raising tax rates in the 2010-11 Budget.

With the economy recording a growth rate of 8.9 per cent in the first half of the current fiscal, Mukherjee is expected to further withdraw the stimulus with a view to reduce the fiscal deficit, which is expected to be about 5.5 per cent of the GDP in 2010-11.