New Delhi: Expectations are running high that despite limitations, Finance Minister P Chidambaram would make one last ditch attempt to revive the manufacturing sector when he presents the last economic statement, the vote on account on Monday. Despite numerous snubs in the past, the auto industry is still hoping for a surprise from North Block, reports CNBC-TV18.
The industry has had very mixed relationship with the Finance Minister. It knew when the FM was recalled to North Block he had to walk a tight rope because he had to reign in the fiscal profligacy. However, what the industry was not prepared for was the fact that the FM would introduce the SUV tax last year.Despite pleas being sent to the finance ministry and the finance minister not paying heed to them, the industry is still very hopeful because just looking at the slowdown and the intensity of the slowdown it believes this is not sustainable. Many senior executives in the industry told CNBC-TV18 that at most the slowdown can be sustained for another six months.
In the commercial vehicle industry alone, there have been 23 months of consecutive decline and about over USD 2 billion worth of capacity investments had been put on hold. Very recently, the heavy industry minister Praful Patel wrote to the finance minister once again raking up the issue of stimulus , but this time around the difference between this communication vis-à-vis the previous ones was the fact that he specifically mentioned the decline in excise duties that the industry needed from 12 percent to 8 percent.
It was in the interim Budget in 2009 that the then finance minister had introduced key excise duty cuts when Pranab Mukherjee had brought down the excise duties from 14 percent to 10 percent and also introduced the Jawaharlal Nehru National Urban Renewal Mission (JnNURM). So, the industry is still hopeful that he will pull a rabbit out of the hat on Monday.
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