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Assocham cheers budget proposals aimed at reducing fiscal deficit

February 28, 2011 : Assocham has described the proposals of Union Budget for 2011-12 as positive and encouraging which attempt at reducing the fiscal deficit down to 5.1 per cent from the earlier estimate of 5.6 per cent for the current fiscal year and 4.6 per cent for the next.

The budget provides a roadmap for the fiscal 2011-12 with focus on encouraging agriculture and education sectors and ensuring that allocations are efficiently delivered, said The Associated Chambers for Commerce and Industry of India (ASSOCHAM).

The budget opts for bringing more services under the tax net and sets a clear direction for rolling out the Direct Tax Code from April 1, 2012, said its president Dilip Modi. There is no major increase in service tax and excise duties in view of buoyancy in government revenues.

“The finance minister has made attempts to improve the social infrastructure with direct cash subsidy for kerosene and reduced interest rates for agriculture loans. The tax exemption for salaried professionals has been raised from Rs 1.6 lakh to Rs 1.8 lakh with Rs 5 lakh tax exemption for individuals above 80 years of age,” said Mr Modi.

Besides allocating Rs 7,860 crore for farm development, the budget provides for tax-free bonds of Rs 30,000 crore to boost infrastructure development. However, all special economic zones have been brought under minimum alternate tax which may prove to be a dampener, he said.

Also, there is no mention of surging global crude oil prices which may fuel inflation further, impact several sectors and upset fiscal management of the government. However, some measures have been introduced to plug leakages and administrative deficiencies in delivering subsidies for the poor by increased use of information technology, said Mr Modi.

He cheered the move to allow mutual funds for having direct access to foreign investors with prior registration with the Securities and Exchange Board of India (SEBI). This will attract more foreign capital inflows to limit current account deficit.

(Press release of assocham)

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