Industry8217;s concern over rising state deficit

MUMBAI, Mar 23: Trade and industry chambers have expressed concern over the uncovered fiscal deficit as revealed in Maharashtra budget 19...

MUMBAI, Mar 23: Trade and industry chambers have expressed concern over the uncovered fiscal deficit as revealed in Maharashtra budget 1999-2000, presented to the state assembly yesterday, while generally welcoming the abolition of octroi in municipal councils.

The Indian Merchants Chamber IMC and the Confederation of Indian Industry CII described the scrapping of octroi as a step in the right direction but they differed on the abolition of VAT system. The Maharashtra Rajya Truck Tempo Tankers Bus Vahatuk Mahasangh and the Federation of Association of Maharashtra have also welcomed abolition of octroi.

IMC President Y P Trivedi said the vast uncovered fiscal deficit left in the state budget was worrisome8217; and any move to bridge the gap by increasing taxes should be avoided.

Avenues should be explored to bridge the gap by slashing meaningless subsidies, scrapping populist schemes, downsizing government machinery and cutting administrative blocks in collection of stamp duty, he said in astatement.

The CII said Maharashtra was already facing a resource crunch and the budget does not spell out any measures to correct the deficit of Rs 1,095 crore leading to inflationary trends.

IMC said the review of the vat system, which was adopted without a proper study, was long overdue while the CII said the abolition of VAT had wiped off the initiative and was a retrograde step. IMC president said hike in tax on diesel and petrol, one per cent rise in electricity duty along with four per cent hike in railway freight would have a cumulative cascading impact on prices of most consumer and industrial products.

The decision to scrap octroi and to make good their loss of revenues from the state coffers was a bold step in the right direction, he said and hoped that in the next four years, steps would be taken to make the municipal councils financially self-sufficient.

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They also hoped that the municipal corporations of Pune, Mumbai and Nagpur would act on the government8217;s recommendation for adopting thesystem of account based levy in lieu of octroi. The scrapping of zunka bhakar scheme, a populist measure, was a politically bold step needed to curtail unproductive expenditure.

CII said the budget has failed to address some important issues adding that the state was losing revenue by way of stamp duty through mergers and acquisitions Mamp;As, which are taking place in neighbouring states. The Consumer Electronics and TV Manufacturers Association complimented the government on accepting the recommendations of the experts committee headed by principal secretary Vallur Narayan and abolishing VAT.