Profits fail to quench firms’ thirst for sops
Jan. 11: Corporate India has seen a strong growth in profits in the first half of this fiscal, but it is still looking at government for sops. In a pre-budget representation to the finance minister on Tuesday, top Indian businessmen asked him to continue with the stimulus measures that had been introduced during the economic slowdown.
Speaking to the media afterwards, the Ficci president, Mr Rajan Mittal, said, “The government should continue with the stimulus measures as the global economy is not out of the woods.” Interestingly, while India Inc. asks the government for sops, it has seen a strong growth in sales and profits so far this fiscal. Companies in Sensex and Nifty – the top Indian corporates, have seen their profits increase by 18-20 per cent in the first six months of FY11, says Mr. Jagannadham Thunuguntla of SMC Capitals. For the quarter ended September 2010, the BSE 500 companies – a group of 500 medium and large firms, have seen net profit increase by 22 per cent over the last year.
Industry bodies however, say that they need these sops for one more year. “The fiscal measures should be continued for one more year as we hope by then the US would have seen recovery and Euro-pean countries market will have seen a U-turn,” says Mr D.S. Rawat, secretary general of Assocham.
During the financial crisis, government had cut excise duty from 12 per cent to 8 per cent and service tax from 12 per cent to 10 in a bid to provide economic stimulus. However, in the last budget, the finance minister, Mr Pranab Mukherjee, partially withdrew the stimulus by increasing excise duty to 10 per cent but kept service tax at 10 per cent.
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