Indian Merchants’ Chamber has extended a cautious welcome to the Union Budget proposals.
In a press statement issued in the wake of announcement of the Budget today, the IMC President, Ms. Bhavna Doshi, said that the Finance Minister has made an honest attempt to tie up the various loose ends of the country’s finances, which were being ravaged by the combined impact of inflation in India and recession in the Western countries.
She said that the Budget contained many specific measures designed to boost the capital market. It has provided Rs. 5000 Cr for venture fund by SIDBI for financing MSMEs, extended sizable tax-free bonds to NHAI, IRFC, and to other infrastructure projects, including housing. “It also offered tax exemption on retail investment up to Rs. 50,000 and also for retail locked-in investments”, she said.
There were also other budgetary provisions such as reduction in STT and Dividend distribution tax, all designed to encourage investment.
Increase in the rate of service tax and excise duty seemed inevitable and will lead to inflationary pressures in the short-term. Although, various other measures targeted at reduction in cost of production and significant allocation for infrastructure, especially power and transport sectors, will help industry to increase efficiencies.
The Finance Minister has said that the new mechanism of subsidy transfer will reduce inefficiencies in the system and lead to overall cost reduction.
Announcement of GST Network becoming functional from August 2012 is a welcome step, Mrs. Doshi added.