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Journalism of Courage
As Finance Minister Pranab Mukherjee prepares to present UPA Government8217;s first Budget after its return to power,there is an expectancy among the industry and the common people alike. Here8217;s why:
Real estate firms hope for affordable housing boost
Auto sector expects govt to continue with incentives
Auto companies are looking forward to the continuation of incentives,including excise duty cuts,given in the two stimulus packages in the Budget 2009-10. Major auto players are expecting that the government will continue with 4 per cent CENVAT cut and reduce excise duty further to 8 per cent from 10 per cent,as announced in the two stimulus packages in December and January. Availability of finance at reasonable cost is important for the industry,without which sales of vehicles cant be revived, Maruti Suzuki India chairman R C Bhargava said. Bajaj Auto chairman Rahul Bajaj said,Export markets are severely hit due to the global financial turmoil. Banks should lend at reasonable rates to customers.
Tax holiday for software firms in for an extension
The government may extend the tax holiday for software exporters beyond March 2010,in the Budget,Analysts said extension of tax benefits will be a great relief to the IT sector,which is reeling under the impact of global financial crisis,which has resulted into fewer number of orders and sharp reduction in earnings. Official sources said though the industry has asked for five years of tax exemption,the Finance Ministry may grant it for two years. Currently software-exporting firms enjoy a tax holiday as their units are set up under the Software Technology Parks of India scheme,which entitles them to such a benefit. Major software exporting firms earn a major chunk of their revenues from the meltdown-hit western markets.
Public sector banks may be recapitalised
The FM may announce recapitalisation of public sector banks to help them meet the credit demand of productive sectors,especially those hit hard by the global financial meltdown. He had given an indication to this effect in his address to the heads of public sector banks last month. As the main shareholder of the public sector banks,the government has already announced that it wants to recapitalise public sector banks to enable them to achieve the CRAR Capital to risk-weighted Assets Ratio of 12 per cent, he had said. He had said that the government will ensure that the credit growth of public sector banks does not suffer for want of capital. Banks likely to benefit include Bank of Maharashtra and Dena Bank.
Pension industry awaits tax benefits for subscribers
The pension industry is hoping that the next Budget would give more tax benefits to subscribers under the new pension system. We are hopeful that the government would give more tax benefits to subscribers under the new pension system, LIC Pension Fund CEO,H Sadhak,said. The new pension system NPS was extended to all citizens from May 1,but attracted a lukewarm response. From the launch of the scheme till date,only 650 people have joined the scheme and a corpus of Rs 80-lakh has been accumulated. Tax incentives to subscribers under the NPS would make the scheme more attractive, Sadhak said. The new pension system was first introduced to government employees in 2004.
Cess on petrol,diesel unlikely to be raised
The Budget is not likely to raise the much-talked-about cess on diesel and petrol,used for building roads and highway infrastructure,from the present Rs two a litre. The cess is not likely to be increased even as the Ministry of Road Transport and Highways is pressing for a hike,sources said. Under the formula for sharing the cess,half of it on diesel goes for rural development. The remaining part of the diesel cess and the entire collection from petrol is shared between the NHAI 57.5 per cent,the Railways 12.5 per cent and state road projects 30 per cent. Earlier,road transport and highways minister Kamal Nath had said the Railways and Rural Development Ministries have to be consulted before a decision in this regard can be taken.
Budget likely to double import duty on steel to 10
Steel makers persitent demand for increasing import duty on the alloy is likely to be partially met in the Budget. Increase in import duty on steel from five per cent now to 10 per cent might happen this time, JSW Groups vice-chairman and managing director Sajjan Jindal said. Jindal,also the president of Assocham,however,said that domestic steel makers were likely to maintain status quo as far as the price of the alloy is concerned even after the hike in import duty since price was linked with the global markets. Concerned over dumping of steel into the domestic market,steel makers had appealed to the Ministry to increase import duty from five per cent now to 15-20 per cent or impose about 25 per cent safeguard duty.
Incentives for exporters could be on their way
Exporters community hit hard by the economic meltdown in key markets like the US and the Europe can expect some incentives in the budget. Export promotion councils and the Federation of Indian Export Organisations FIEO had met finance minister Pranab Mukherjee and commerce and industry minister Anand Sharma seeking incentives,including credit at 7 per cent interest rate and income tax holiday for five years. Impacted by drastic fall in exports in the second half of 2008-09 due to global downturn,the country8217;s merchandise exports grew just 3.4 per cent to USD 168.7 billion. But the shipments have been dropping for eight months in a row since October 2008,costing 5 million jobs,as per FIEO estimates.
BSNL listing,3G auction revenue targets may be set
The listing of state-run BSNL and the expected realisation from the auction of 3G spectrum are likely to find mention in the budget proposal to be presented by finance minister Pranab Mukherjee. Official sources said,the Budget statement may mention the 10 per cent stake dilution of BSNL under the head expected receipts of the government from disinvestment. The auction of 3G spectrum is also expected to be a part of the budgetary announcements along with the governments anticipated collection of about Rs 25,000-Rs 30,000 crore from the auction. The details of the process including the reserve price and number of slots will be decided by an empowered Group of Ministers.
