Nearly three months after the presentation of the Budget, it is being increasingly realized that the unique blend of economic reforms along with social engineering, conceived at the beginning of the financial year, has not done much to shore up the confidence of consumers, investors, business and industry. No doubt, the Finance Minister needs to be complimented for taking the much-needed steps to propel our economy towards a high echelon of growth albeit with a social conscience. Yet, much more could have been done to allay the apprehensions of industry and tax experts while reviewing some of the provisions made in the budget. For example, in my view, the Fringe Benefit Tax as well as the Cash Withdrawal Tax should have been scrapped altogether instead of making good with a dilution of a few clauses.

At a time when the Prime Minister seems to be saying that the business of India is business, such anomalies throw sand in the wheel of enterprise by boosting travel, conveyance and marketing costs as well as by adding to tax complexities. Against this backdrop the budget comes across as a 'missed' opportunity to push the crucial second-generation reforms at this time when the economy and industry are on upswing.

On the positive roster, our economy continues to remain on a high growth path and business confidence is on the ascendant. This is also indicated by NCAER, which maintains that the Business Confidence Index has touched a new high since 1995. But whether the confidence levels would be sustained in the near future is a question. Already, the optimism generated by the growth-oriented budget 2005-06 has become somewhat subdued in view of the mixed signals received about the economy doing the third and fourth quarters of 2004-05. Besides, the seeds for a slowdown in both international and domestic economies are beginning to sprout. Oil prices and other raw material costs continue to be at record high levels. Slowly but surely higher input prices are cascading through the global and Indian economies in the form of higher prices. Even the price of money, expressed in terms of interest rates, is creeping higher. Under these circumstances, experts predict that corporates would find it hard to maintain profitability and the impact of present rising interest rates, firm input prices and possibly higher fuel prices would certainly be felt on their bottom lines. Not surprisingly, the Institute of Economic Growth has predicted that industrial growth would slow down to 6.7% in 2005-06. And the latest IMD World Competitiveness Ranking Report shows that India's Competitiveness has already slipped five notches to 39th rank as against 34th in the previous year. This is something that our policymakers would do well to note and act upon.

It does appear that the challenges facing the manufacturing industry like cascading taxes, archaic labour laws and inadequate infrastructure are well understood by the government. Some of the recent announcements made clearly demonstrate the government's commitment to continue the reform process and address issues that hold back growth. Pursuing the economic reforms, the Government has taken significant measures to facilitate foreign direct investments. This has instilled new confidence in foreign investors and hopefully would lead to greater investment inflow in vital sectors of the economy.

The initiatives and positive measures taken by the Ministry of Company Affairs in the lat one year have helped generate confidence in the corporate world. The consultative approach of the Ministry while initiating a complete overhaul of t Companies Act has encouraged an open dialogue with the industry. Putting concept paper on company law on the website for comments by the industry has given good opportunity to the industry to put forth their suggestions and highlight their practical problems and concerns.

In the meanwhile, the Centenary level celebrations, flagged off by the Chamber in March this year, with the inaugural ceremony addressed by the Hon'ble Prime Minister has gathered steam, though the focus this time, has been on the state level programmes in partnership with State Governments under our command area. The Chamber has successfully completed a very high profile programme at Madhya Pradesh which was inaugurated by the Chief Minister of the state. The highlight of the event has been the institution of Udyog Ratna award in which the Chief Minister facilitates the industrialists for the major contribution made by them towards industrial growth of the state.

At the international level, the Chamber mounted a delegation to Myanmar, under the leadership of Dr. L.K Malhotra, Chairman, International Affairs Committee for Asia and Oceania, during the month of May. This gave our members a unique opportunity of exploring and identifying mutually beneficial areas for promotion of bilateral trade, joint ventures, marketing tie-ups etc. as well as establishing business contacts.

At the current juncture, political relations between India and Myanmar are cordial and this bodes well for enhancing bilateral trade and economic cooperation at the bilateral level. Therefore, to give the much-needed impetus to India-Myanmar ties, it is desirable to foster greater people to people contacts as well as enhance interaction between institutions through exchange of business delegations, trade fairs etc.

(K N Memani)
President