Mumbai, Mar 1(UNI) Budget 2006-07 has little tangible to offer for development of the infrastructure sector though this sector deserves top priority for investment if India is to achieve the targeted 10 per cent GDP growth in the near future, the Indian Merchants' Chamber said in a press release here today.
''The so-called improvement in the fiscal situation was primarily because of high GDP growth of 8.1 per cent and not because of any concrete step taken in the budget,'' IMC president Rajesh Kapadia said in ther release.
The markets will be hit considerably by the many hurtful provisions in respect of levy of book profits long-term capital gains increase in securities transaction tax and enhancement of service tax rate, Mr Kapadia said.
He said the budget also did little to mobilise investment from senior citizens. ''On the other hand, it cast additional tax burden on the cooperative banks sector, which has not been in the best of health''. The Budget reduced allocation on national urban renewal projects, even while asserting that the Union Government would favourably consider newer demands on the allocation for metro railway in Hyderabad.
Mr Kapadia, however, appreciated the government's continuing focus on the rural and agricultural sector which would augur well for the industry in long term, because it would increase rural demand for industrial products.
Among the salutary features were the budgetary provisions for the textiles and food processing industries, constitution of a special group to study the taxation of gems and jewellary sector, abolition of the one-by-six scheme for filing returns, setting up a fund for revitalising the tea plantations, development of fifteen tourist areas, grants to some major universities, credit guarantee trust scheme for small industries, manufacture of semi conductors, among others.
Mr Kapadia said the budget proposals on both the direct and indirect taxes were more or less on expected lines. As expected, the Finance Minister refrained from effecting any changes in both the personal and corporate income tax rates.
The Finance Minister did indeed continue rationalisation of customs and excise duties by reducing their rates to international parity levels. ''But enhancement of service tax, securities transaction tax and minimum alternate tax (MAT) rates have come as a jolt,'' Mr Kapadia said.
He welcomed the Finance Minister's announcement that plans were afoot to introduce the goods and services tax (GST) by 2010. Also, at the macro level, a steady improvement in the key economic indicators such as GDP growth, savings rate, gross capital formation rate, and non-food credit growth was a healthy sign and augured well for the economy.
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