The Indian industry expects the finance minister to come out with specific measures to revive the recession hit economy when he replies to the general discussion on the Union budget for 1992-93 in the Lok Sabha on Thursday.

Representatives of apex bodies of trade and industry and leading industrialists expect the finance minister to bail out in particular the automobile and consumer electronics sectors.

Both the industrialists and economists, who responded to a PTI questionnaire on the Union budget, feel there are no specific moves in the budget proposals to end recession.

They are looking forward to concessions such as lower corporate tax, enlarged depreciation allowance and excise duty cuts to help Indian industry modernise and achieve global competitiveness.

Dr. Malcolm Adiseshaiah, Chairman of the Madras Institute of Development Studies, feels that the effect of revenue loss through the proposed customs duty reduction, leading to overall increase in excise duty, will fuel inflation and hold back economic revival.

He expects the Indian economy to register less than two per cent growth in 1992-93, with industrial production being negative during the first seven months of the same period.

According to the Federation of Indian Chamber of Commerce and Industry, the potential in industries like automobile and consumer electronic to create larger employment through their ancillary units may be eroded if recession continues.

Mr. DN Patodia, a leading economist and industrialist, feels that the substantial increase in excise duty on iron and steel will push up the cost of automobile production, forcing corresponding increase in the sale price at a time when demand may remain compressed.

However, Dr. JD Agarwal, Director of the Indian Institute of Finance, Blames the manufacturess of automobiles and consumer electronics products, to an extent, for the recession in their respective sectors, since they indiscriminately hike their prices whenever there is an increase in excise duty.

Mr. Kulwant Rai, a leading industrialist, feel that the concessions proposed in the budget by way of customs duty reductions will be offset, since an importer would have to procure foreign exchange from the open market at rates 15 to 20 per cent higher than the official rates.
This, the industry feels would hurt consumer electronic sector the most, owing to large import component in their products.

Dr. B.M Bhatia of the Centre of Policy Research is of the view that budget alone will not be able to pull the automobile and components sectors out of recession. “There are a number of other non-fiscal steps and policy measures that are necessary for this purpos,. “ Dr. Bhatia notes.