Finance Minister Pranab Mukherjee will present the annual Budget on Friday against a backdrop of slowing growth and burgeoning fiscal deficit. The Government will have to do a balancing act, by raising taxes on some items such as cars, consumer goods and cement to raise revenue, and give incentives to boost business confidence.
Economic growth slowed to 6.1 per cent, its weakest annual pace in almost three years, in the three months to December, as high interest rates and rising input costs constrained investment and manufacturing.
Following are industry expectations on the budget for the fiscal year 2012/13 that begins on April 1.
* Retailers are expecting the Government to announce a roadmap to open up the supermarket sector to foreign giants such as Wal-Mart and Carrefour, which would help in tie-ups and boost capital inflows.
* Automakers are bracing for a possible tax of up to Rs 80,000 on diesel cars to partially help fuel retailers for selling fuel at below cost. Analysts say if levied, the tax could result in the cost of a diesel car increasing by up to 20 per cent.
* The Government is likely to raise the exemption limit on investment in long-term tax-free bonds for infrastructure projects.
* Banks expect a Government package for loans given to state electricity boards that are in the red and unable to repay.
* Banks also expect tax breaks on long-term deposits to help address asset-liability mismatch.
* The Government may roll back stimulus provided during the 2008/09 crisis, by raising excise duty on non-petroleum products such as cement, consumer goods and cigarettes to 12 per cent from 10 per cent. Companies are lobbying against it.
* Government may impose 15-25 per cent customs duty on select import items, including power equipment to boost local industry.
* The finance ministry may extend tax holiday to 10 years for oil producers and refiners, from 7 years currently.
* Expect Government to remove 5 per cent import duty on LNG and natural gas.
* IT industry is lobbying for an extension of tax holiday, especially for small and medium firms to cope with pricing pressures and lower margins.
* The IT industry has also asked for reviving tax exemption for units in special economic zones.
* Hospitals and healthcare companies expect extension of tax holiday in Tier-II and III towns to 10 years from 5 years.
* The finance ministry may announce incentives to encourage higher spending on drugs research and development. The Government is also likely to raise healthcare spending.
* Import duty on thermal coal may be scrapped to give a boost to power companies.
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