As a precursor to the budget to be announced at the end of this month, business and finance channel CNBC India held CNBC Roundtable - Pre Budget 2002 in Mumbai on 18 February. The idea was to cross pollinate and fertilise a series of ideas regarding corporate India's expectations and wishes.

The event will be telecast on the channel as a series of episodes during this week. Among the two panels that constituted the roundtable, the first examined the manufacturing sector's needs while the second looked at the state of affairs from the financial perspective. The media and infotech sectors were, however, conspicuous by their absence.

Speakers included Godrej Industries chairman Adi Godrej, Ficci president R S Lodha, Airfreight chairman Cyrus Guzder and Kotak Mahindra finance vice-chairman Uday S Kotak. Godrej pointed out that the demand for FMCG goods had dwindled due to high indirect taxes. State governments have been negating the benefits of the Centre's lowered excise duties by increasing sales taxes. The two need to work in sync if demand is to be stimulated, he noted. The deflationary effect, he observed, is also resulting in customers postponing purchases by six months in anticipation of another price fall and further discounts.

Cyrus Guzder highlighted the fact that spending money is about having cash on hand coupled with the right attitude. He attributed the high level of costs to distortions in the market structure. He said the investment firms were afraid of sinking extra money into product manufacturing as they feared demand is not likely to match supply. Panelists were also in favour of removing the double taxation structure in order to simplify the process. Zero dividend tax was one of the measures suggested.

The entertainment and media sectors need to deescalate the duty structure in order to reach the level of IT, panelists said. PC penetration in India could be improved by a reduction in rates, while the government needs to remove industry protection gradually to allow for motivation to restructure, it was pointed out.

Regarding the stimulation of the equities market, Kotak noted that if people borrow money to pay for equities, interest should be allowed as a deduction within a reasonable framework. The cost of investment also needs to be taken into account so that people are not averse to risks, he said. Disinvestment will reduce government interference thus increasing efficiency in the economy, he said.

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