A Budget focused on education, knowledge and skills is what the Confederation of Indian Industry wishes for this year.
The CII would also like to see, in the forthcoming Budget, the government exercise fiscal prudence, reduce embedded tax rates and outline a roadmap for the implementation of Goods and Services Tax (GST) by 2010. Most importantly, the CII wants the government to stick to the FRBM targets and maintain the revenue deficits at 4 per cent. It will be taking up these issues in its meeting with the finance ministry on January 9.
CII President R Seshasayee told Business Standard that ideally this year's Budget must lay a thrust on education by increasing the government's spend to 6 per cent of GDP from the current 4 per cent. This increase should be accompanied by a concentrated effort to improve the education delivery system, he added. A framework for investment by the private sector in education was also needed, Seshasayee said.
The CII has mooted the idea of a skill development bank on the lines of industrial development banks to advance loans for education to the economically weaker sections. This bank will be a separate financial institution, which will not lend on the basis of tangible assets. "The bank will finance higher and even matriculate education. It will lend on the basis of the skill sets of the individual, and not physical assets," Seshasayee said.
The chamber's pre-Budget memorandum has urged the government to indicate a blueprint for implementation of GST so that the common tax can be in place by 2010.
The industry body now wants the government to announce an empowered committee on GST similar to the committee on value-added tax (VAT) to chalk out the roadmap for the rollout of GST.
According to Seshasayee, GST as a concept needs a lot of reworking. "The government should ensure that there is uniformity in the taxation procedure and that there is no adverse impact of GST on the state government's finances," he said.
In line with the recommendations made by the Task Force on Indirect Taxes to reduce the tax incidence in the country, the chamber wants the government to outline a roadmap for reducing taxation levels.
The country has one of the highest incidences of indirect tax on goods at 28.5 per cent, with most manufactured products attracting 16 per cent excise duty and 12.5 per cent VAT. The CII wants a step-by-step reduction of this tax from 28.5 per cent to 15 per cent over a ten-year period and after the introduction of GST, the chamber wants the government to reduce the rate of GST.
"We want the government to reduce overall taxes along with the adoption of GST. The government can look at reducing tax rates by half a percentage or one percentage every year till the taxes collapse and GST is adopted," Seshasayee said.