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Kerala budget on July 8, industry stays hopeful 

The Times of India , Jul 07, 2016

Kerala industry is optimistic about the Budget set for release on July 8, as industrial experts including Confederation of Indian Industry (CII) heads indicate that the state government has already given its intent to develop the infrastructural network which is crucial for industrial development. Now, when the Indian Parliament proposes to introduce the Goods and Services Tax (GST) Bill in this monsoon session beginning July 18, State industry welcomes it with hope that Kerala will be the first state to support that which will be indicative in the budget.

"State government has declared its intent to develop infrastructure projects including roads, seaports and airports which is crucial to industrial development, so it will be a major thrust area in the budget to be released on Friday. With that, Kerala will be one of the first states to pursue tax reforms and to welcome GST and CII had been pushing for that," CII Kerala State Council chairman Harikrishnan R Nair told TOI.

GST will put an end to the cascading tax on taxes by the Centre and State governments that affects imports and business decisions. Introduction of GST will lead to abolition of other taxes such as central sales tax, state-level sales tax, excise duty, service tax, and value-added tax and Central VAT (CENVAT), Industry department officials said.

Further, CII official said, that the budget is expected to support revival of crisis-ridden Public Sector Undertakings (PSUs) including traditional sector such as cashew. Though decentralised, there is a dichotomy in governance of Panchayati Raj institutions. It leads to undue delay in getting clearances for industrial units which can be checked and with effective single window clearance, he said.

More funds are expected for infrastructure projects in this budget, the state government has already constituted a task force for industrial and infrastructure development and declared its policy perspective, Federation of Indian Chambers of Commerce and Industry (FICCI) Kerala State Council head Savio Mathew said.

"A major challenge for the state is land acquisition for infrastructure projects including road network and for that the government needs to opt a realistic approach in land acquisition by offering fair price at market rates to those evicted. More public private sector participation (PPP) mode projects can be expected. Industrial institutional tie ups and acclaimed international institutes permitted to operate from the state can improve quality standards," he said. More handholding support for Micro, Small and Medium Enterprises (MSME) ensuring international participation and support for crisis-ridden PSUs are expected, he said.

Uncertainty is over tax alignment in Kerala and is likely to be eased with the GST Bill to be passed by Parliament. Now, Kerala jewellers are concerned about 4 to 5 percent VAT here compared to one percent tax in other states, which is a clear anomaly. GST if introduced will be a major attempt at tax reform and Kerala is expected to benefit from that, he said.

Industries department official said start-up support and land acquisition for industry is expected. Finance Minister Thomas Isaac has already indicated that the best 1000 start-up ideas will receive Rs 1 lakh each per year. Among that, 20 percent of the selected proposals will get Rs 1 crore each in a year for setting up the start-up. Budget is expected to support the promotion of value-added products of coconut, banana, jackfruit and pineapple based on local availability, the official said.