With days remaining for the new government to take charge and the new council of ministers to be sworn in, all eyes are already on the finance ministry. With the economy losing steam, a number of trade bodies have already started their pre-budget consultations with the finance ministry.
Even though the chambers of ministers are empty at North Block, the number of visitors to meet the secretaries and other important finance ministry officials has increased. “We have started the pre-budget consultation process. You can say that the groundwork for the Union budget has started,” said a finance ministry spokesperson.
Among the major trade bodies, FICCI was the first to seek consultations with revenue secretary Ajay Bhushan Pandey. The trade lobby had presented a list of demands including seeking exemption from the Minimum Alternate Tax (MAT) introduced by the Modi government in 2015, which requires private companies to pay a minimum amount of tax as income tax.
Another request from the trade body was to consider revising the rate of corporate tax to 25 per cent from 30 per cent. “This was a pending promise of the Modi government from 2015-16, so we wanted to remind about the past discussions and agreements we have had with former finance minister Arun Jaitley,” said industrialist Sandip Somany, president, FICCI, after coming out of the meeting with Pandey.
Also making their way to North Block before the new government steps in were members of the automobile industry. The Society of Indian Automobile Manufacturers (SIAM) made a presentation before Subhash Chandra Garg, economic affairs and finance secretary, on measures to boost the auto sector, which is witnessing a slowdown in demand for all categories of passenger vehicles for the last 10 months now.
The presentation was also attended by other top officials in the ministry including chief economic adviser Krishnamurthy Subramanian. The former ISB professor also quizzed auto producers on their unsold stock of cars accumulated during the year and on the status of their capex expansions. Among other things, auto manufacturers had sought a speedy introduction of Bharat-VI fuels and expressed their readiness to produce vehicles meeting the requirements of the new fuel, as soon as it is introduced by the government.
Representatives of another trade body, CII, also met finance ministry officials on more than one occasion. They too have sought a cut in corporate tax to 25 per cent in this budget. They also met Rajiv Kumar, secretary, banking and financial services, and sought resolutions from the government to tide over a prolonged crisis of liquidity crunch.
Efforts made in the past by the government had not resulted in improved capital flow for industries big, medium or small. Instead, the problem has exacerbated in the last few months. “Banks will have to revive this sagging credit culture at a war footing,” said Vikram Kirloskar, the new president of one India’s oldest and largest trade body after the meeting.
The finance ministry is expected to make its own separate pre-budget presentations to the new finance minister after May 30 with inputs from various departments of the ministry. “These consultations would be taken up one by one with the finance minister in the run-up to the budget when industry people and economists would also be called,” said a finance ministry official.