New Delhi, Dec 16: In its pre-budget memorandum 2010-2011, Confederation of Indian Indsutry (CII) stressed on the importance of reducing the fiscal deficit to 5 per cent (of GDP) over the next fiscal versus the current level of 6.8 per cent.
CII told the top officials of Ministry of Finance to aim at maintaining and further accelerating the recovery process, along with focusing on correcting the fiscal deficit which is at an undesirable level.
The leading industrial body has also submitted suggestions on how to bring down the fiscal deficit without hampering recovery. The recommendations include rationalization of expenditure, augmentation in revenue, enhancing the efficiency of funds spent on various flagship programs like NREGA among others.
On the revenue front, the apex body suggested a system through which Rs 50,000 crore from Rs 2 lakh crore, held up in various disputes and litigations for a long time, could be unlocked by resolving one quarter of the existing disputes. CII suggests measures such as facilitating negotiations, out of court settlements, establishing fast trials Court to achieve this.
Besides this, Rs 40,00 crore can be raised through disinvestment. And the revenues from both these measures, along with that from higher tax collection and telecom auction expected next year, could easily materialize a saving of 0.8 percentage point in fiscal deficit, the CII memorandum said.
CII's recommendations on indirect taxes include continuation of 10pc rate of peak customs duty, abolition of customs duty on inputs such as non-coking coal, petroleum coke, scrap of non-ferrous metals, ferro-nickel etc, and continuation of the general rate of excise duties at 8 per cent level.
On direct taxes, CII has asked for reduction in MAT rate along with demanding extension of sunset clause under section 10 A and 10 B beyond Mar 31, 2011 for next 5 years as IT/ITEs sector are key contributors to forex earnings and many companies are in the process of setting up undertaking in these areas.
The pre-budget memorandum also mentions measures, such as the need for increase in depreciation rates on plant and machinery to 25 per cent and to extend the scope of investment-linked-tax-incentive, which was offered to select sectors during Union Budget 2009-10, to the entire manufacturing sector.