In a pre-Budget memorandum, the association has said that despite possibility of higher fiscal deficit, government investment in infrastructure sector should go up.

The Phdcci expects the budget proposals to be formulated in consonance with the broad strategy outlined by policy reforms, however, it fears that revenue generation objective alone might compound the problem of industrial stagnation.

The chamber has suggested that there was an immediate need to reverse the slow growth in the economy, adding that savings friendly fiscal policies should be adopted to achieve a savings rate of 30 per cent of the gross domestic product.

In direct taxes, tax administration should be streamlined, it said and added that the one-in-six criteria has resulted in overwhelming number of returns. Besides focusing onreduction of tax rates, adjustment of tariff and excise duties and corrections in inverted duty structure is needed to encourage value addition, it added.

Non-merit subsidies should be eliminated and economic legislations should be in tune with changed economic conditions, the memorandum said. The chamber said that a workable charter of action in respect of pending bills in parliament and other legislative imperatives need to be spelt out so that fiscal measures receive a positive response from industry. On foreign direct investment (FDI), while approval mechanisms needed to be simplified, it was also important to deal with ground rules of actual implementation of projects, it said, adding individual states needed to evolve a more positive stance towards FDI.

Regretting the slow pace of public sector units (PSU) disinvestment, the chamber said professional and autonomous management was essential to revitalise their contribution towards industrial development. In order to facilitate transparency, periodicperformance reporting of PSU's should be made available to public scrutiny.

Advocating an enhanced capital outlay in agriculture and rural sectors, Phdcci said delivery mechanism of development schemes and public services should be improved for better utilisation of funds.