State Budget: 2012-13 Implications and Impact on Commerce & Industry

Today an interactive meeting on “State Budget: 2012-13 Implications and Impact on Commerce & Industry” was held at FAPCCI in association with MPOT group. The meeting was commenced with the welcome address by Mr. V.S. Raju, President Fapcci. The speaker panel is Mr Ye. Seshasai Babu, CA, Mr. C. Kutumba Rao, Expert in industry analysis, Mr. C. Narasimha Rao, Senior Journalist, Prof. ML Kantha Rao, Mr. Nitin K Parekh, Chairman Trade & Commerce committee, Fapcci, Mr. Devendra Surana, Senior Vice President, Fapcci, Mr. M.V. Rajeswara Rao, Secretary General, Fapcci. The meeting discussed the impact of the State budget on Commerce & Industry.

In the welcome address Mr. V. S Raju, president Fapcci requested the Government to fulfill the hopes and aspirations of the Commerce & Industry in order to support the Government in achieving the targeted revenues and social services. He requested for assured power supply to industry and requested for increase of Capital expenditure on Energy sector in order to meet the growing demand of industry at large.

Mr. Seshasai Babu informed that in budget it was proposed Sales tax revenue will be Rs. 45,000 crores from 36,000 cr i.e., an increase of Rs. 9000 cr is proposed, which is 25% of the current year collections, which will be very difficult to generate since severe drought conditions and negative growth conditions in Agriculture sector. Based on this scenario, there will be possibility of bringing more exempted items under taxable net and there is further possibility for change of classification from 5% to 14.5% slab for some of goods. At the same time the increase proposed vehicle tax will lead to further burden on Commerce and Industry.

Mr. Parikh requested the Government to allow the input credit of vat on HSD, furnace oil, coal and to bring back the higher tax slab from 14.5% to 12.5%. He further requested the Government not to change the tax rates middle of the year and middle of the month which was causing problems in their planning. He further requested to exempt all food grains from the tax net. In order to face the competition with neighboring states, he requested for a stable tax policy like the Central Government doing for the past decade.

Mr. C Kutumba Rao, expressed that the failure of many SEZ’s and erratic power supply effecting the Industrial growth rate and there is no clarity in the budget on allotment of lands to new industries. He further requested for increase of Capital expenditure on Energy, Infrastructure and midyear review of budgetary targets. He further requested to release the pending incentives to the industry, which are of Rs. 500 cr immediately. He expressed with the uniform growth of the industry will help to meet the budgetary target of Rajiv Yuvakiranlu. He expressed dis satisfaction with the for the poor co-ordination by the Government with Trade and Industry in pre-budget session and expressed that 50% of revenues are contributed by the Trade and Industry should be taken into confidence in preparation of the Budget of the Government.

Mr. Rajeswara Rao expressed that there should be pre-budget and post budget meetings with Fapcci, CII and other bodies of the Trade and Industry. He requested the government to minimize the power cuts to the Industry, which was causing loss to the nation in creation of wealth and jobs. He expressed the revenues from Sales tax are gone up by 100% within 3 years with support of the Trade and Industry and requested Government to support the Trade and Industry on all aspects.

Prof. ML Kantha Rao expressed that the Government is concentrating on numbers and not facts. In 5^th five year plan the contribution from Agriculture sector is 60% of the budget and at present which is less than 13%. He expressed that the state, which are having more agro based industries and dependency on agriculture is higher, should be given preference to agriculture sector and the utilization of capital expenditure should be with proper analysis for the returns on the capital expenditure. He further expressed that there should be more allocation to Trade and Industry in order to meet the budgetary targets and it will be difficult to meet the budgetary revenues without changing the tax rates and without effective mechanism.

Mr. Narasimharao Rao expressed that the budget proposed by the Government is not reflecting the present requirement of the people at large and in particular the expectations of the Industry and the agriculture sector. He expressed that there is co-ordination missing from Government with the Industry bodies and associations. He requested the Government to have proper planning for assured power supply to Industry and requested the Government to release the pending incentives and to release long term strategy policy for power and industry.

Mr. Devendra Surana expressed that the state of Andhra Pradesh has lot of natural resources and coastal line, with the use of the all facilities the Trade and Industry are showing good growth rate in comparison with other states. He requested the Government to increase the budgetary support to Trade and Industry, which will help to meet the budgetary proposal of creation of employment in private sector under “ yuva kiranalu’

In conclusion the meeting requested the Government

1). to rationalize the tax rates and to bring down the maximum tax rate to 12.5%,

2). Not to Change the tax rates/slabs in the middle of the year/month.

3). to release the incentives and subsidies pending to the Trade and Industry

4). to assure good power supply and to lift the power cut to industry