With the budget session nearing, it is time for apex chambers of commerce to come out with their list of demands. On its part, the Federation of Indian Chambers of Commerce and Industry (FICCI) has put forth its demands to Yashwant Sinha, the union finance minister.

Addressing a press conference at Chennai, Chirayu R Amin, president of FICCI, has called for designing new instruments to boost capital market investments from banks, provident and pension funds.

According to him, though banks are allowed to invest 5 per cent of their advances – nearly Rs 25,000 crore – in the capital market, the actual investment is less than Rs 1,500 crore. "This shows the mental block amongst bankers to go to the equity market and also emphasises the lack of research base that exists in banks. Focus should be on to give a fillip to the primary market area which provides funds for new investments," he added.

He said dedicated mutual funds, index-based derivatives and other special instruments would help overcome this unwillingness of banks to invest in the equity market. "The capital market is now lost to foreign institutional investors. New instruments that offer hedging facilities for investors would result in retail investors looking at the capital market," he remarked.

When questioned about the whopping Rs 60,000-crore non-performing assets of the banking industry and the reason for FICCI''s silence on the subject, he only said, "The defaulting companies would pay up their loans when industrial activity picks up. It will only happen if the government agrees to demands like rationalisation of labour laws, stabilisation of corporate tax at 30 per cent and abolishing the surcharge."

Some other concessions demanded by FICCI are provision incentives for fund flow into capital market, abolition of additional tax on dividend and minimum alternate tax, increasing the tax slab rates for individuals and reducing interest and power costs.

Dr Amit Mitra, secretary-general of FICCI, chipped in saying, that out of the Rs 60,000 crore NPAs, only Rs 7,000 crore – principal – is lent to private corporates, around Rs 25,000 crore is lent to public sector units and to the priority sector and the outstanding on the above accounting for the balance.

Continuing his ‘wish list’, Mr Amin demanded a tax rebate to institutions / banks having the project-lending portfolio of more than 50 per cent of the total advances so that they do not shy away from project financing. He also urged the government to spend 50 per cent of the millennium bond receipt on infrastructure development.

In the area of indirect taxes, he called for the implementation of VAT, introduction of the three-tier import duty structure, a freeze on import duty reduction for the next three years and amending SAARC treaty to avoid third country inflows at zero duty.

Suggesting ways to garner resources, Mr Amin said there was need to bring more services under the tax net, implement the Geethakrishnan Committee Report, enact the fiscal responsibility bill as early as possible and get profit-making PSUs to offer higher dividends, say around 28 per cent.