India Inc. says budget not up to expectations, but hails rural spending

February 16th, 2009 - 6:54 pm ICT by IANS  

New Delhi, Feb 16 (IANS) Hours after External Affairs Minister Pranab Mukherjee presented the interim budget for 2009-10, India Inc. said Monday that the budget failed to live up to expectations, but welcomed the higher spending in social and infrastructure sectors, saying it will become the “main source of demand generation”.

The Associated Chambers of Commerce and Industry (Assocham) said in its response that it had expected a third and last stimulus package in the interim-budget. But “Mukherjee restrained himself from presenting it and rather chose the new government to unveil the package,” the industry body said.

It added that at least surcharge on corporate taxes should have been removed and new corporate tax ceiling introduced in the budget.

“There was no hint in this direction in the interim-budget. Likewise, on infrastructure refinancing, the focus is there in the budget but directions are not clearly laid out,” Assocham president Sajjan Jindal said.

He, however, welcomed the government’s decision to strengthen its social schemes and “enhance allocations for rural infrastructure, which will become main sources for demand generation”.

Added Harsh Pati Singhania, president of the Federation of Indian chamber of commerce and industry (FICCI): “The interim budget has set the direction for the next government and gives a clear message on what steps need to be taken in the months following the general elections.”

The FICCI also welcomed the government’s move to increase spending in the rural sector.

“In fact the government has allocated Rs.30,100 crore (Rs.301 billion) for the rural employment generation scheme and this is a positive move in line with its stated commitment to the development of rural economy,” Singhania said.

“While there have been no specific measures other than those related to extension of interest subvention scheme for exports for another six months and recapitalisation of select public sector banks over time, yet the interim budget is welcome as it has provided the contours of the strategy that the new government will have to implement,” he added.

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