The Telegraph
Since 1st March, 1999
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Expectations met, Bengal chambers happy

Calcutta, Feb. 28: The city chambers of commerce and industry greeted finance minister Jaswant Singh’s maiden budget saying it met “most expectations”.

“This budget will help revive the capital markets because of the lifting of dividend tax and exemption from long-term capital gains tax,” Dipankar Chatterji, chairman of the Confederation of Indian Industry (CII), (eastern region) said.

“Announcements on cash management of industries, the social sector, provision for medical insurance for persons living below the poverty line, are steps in the right direction,” he said. “By announcing sweeping procedural simplification for tax, which will bring down transaction cost of the industry, the finance minister has confirmed the thrust on reforms.”

Chatterji also hailed the initiative to set up new financing pattern for infrastructure projects.

“Singh has broken new ground by announcing special purpose vehicles where only viability gap of any project would be financed by the government.”

Bengal Chamber of Commerce and Industry chairman Sumit Mazumder said, “By and large, it has been a very encouraging and a positive budget which covered all aspects.”

Mazumder said the increase in the service tax rate to 8 per cent was the only negative factor in the budget, but that was expected considering there was speculation that it would be increased to 10 per cent.

“The concern of the pension fund has rightly been addressed by setting up a pension regulatory authority,” he said.

CII (ER) vice-chairman Sanjay Budhia said the proposal for self-assessment would make life easier for exporters as well as importers.

Rahul Mitra, partner, PricewaterhouseCoopers said the finance minister has dispelled the fear that the tax holiday enjoyed by the IT sector would be withdrawn.

N. R. Goenka, president of the Bharat Chamber of Commerce, said the finance minister deserved accolades for presenting a budget that is soft yet growth-oriented.

“The budget has recognised the economic compulsions of the second revolution of the agriculture sector, development of the housing sector, healthcare, intensification of the reform process, fiscal consolidation and development of vibrant infrastructure and improvement of tourism. The budget has laid emphasis on employment generation, poverty alleviation, broadening of the tax net, improvement of tax administration and increased efficiency and productivity,” said Goenka.

Samar Mohan Saha, president of the Oriental Chamber of Commerce, said the finance minister had come up with a bold budget despite heavy fiscal deficit year after year. He has also maintained the direct tax structure with marginal relief and reduced excise duty on certain essential commodities.

Vikram Thapar, president of the Indian Chamber of Commerce, said the budget fell short of the industry’s expectations. “We expected more growth impulses given the huge challenges facing industry,” added Thapar.

Expressing concern over the detrimental move to continue central sales tax in addition to VAT, Thapar said this would lead to a huge burden which would ultimately be passed on to the common man and would therefore be inflationary.

“The dividend distribution tax of 12.5 per cent would not necessarily re-invigorate the markets despite the withdrawal of dividend tax at the hands of investors. The revival of the stock markets has also not been addressed,” he adds.

“Without the buoyant revival of the capital markets, it would be next to impossible to get the resources required to boost investment in infrastructure.”

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