CII urges govt to arrest growth slippage
Expressing concern over the falling industrial production growth, the Confederation of Indian Industry on Wednesday urged the government to arrest the downward trend through Budget measures like reduction in corporate tax, elimination of minimum alternate tax, and suitable tax structure for corporate restructuring.
Industry required short-term measures to meet the lack of demand and long-term measures to restore the balance of shrinking contribution of industry in the country's GDP, CII said.
The latest Index of Industrial Production figures for December, released by the Central Statistical Organaisation, confirmed the downtrend in industrial production growth, it said.
The poor month-over-month IIP growth has been a trend since 1995. Though there have been periods of growth, the peak growth rates have declined steadily, it said.
Though fuelled by the large pool of knowledge workers, the service sector had emerged as a key strength of the Indian economy.
Excessive dependence on services was not in the long-term interests of the country, CII said.
The CII pointed out that the share of industry in most of the developing Asian countries' GDP was much higher as compared to India.
For three of Asia's fastest growing economies of China, Indonesia and Malaysia, the contribution of industry was not just higher compared to India, but exceeded the shares of their respective services sectors.
According CII, high external costs including high interest, power and infrastructure costs discourage investment in manufacturing. It suggested reduction in corporate tax to 30 per cent from the present 35 per cent and elimination of MAT.
Reintroduction of investment allowance for five years at the old rate of 25 per cent of the actual cost of fixed assets purchased during the year would also help boost investment, it said.
CII also suggested suitable tax structure to facilitate corporate restructuring activity, which would be a fall-out of the slowdown in industry.
PTI
YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
Run-Up To The Budget
Money