Pranab Mukherjee, here is India Inc's 2012 Budget wish list

A date is finally set. The Union Budget will be presented on March 16 post the State elections. This could be the UPA government's make-or-break Budget. The economy is going through a slowdown. The bureaucracy is in a state of paralysis and corporate India is suffering from a bout of depression.

Given these fiscal and political constraints can Pranab Mukherjee change the mood of the nation? Will he present an agenda for growth or a statement of accounts?

Adi Godrej, president designated of the Confederation of Indian Industry; Sunil Munjal, chairman of CIIs Economic Policy Council; Rajiv Memani, chairman of CIIs Task Force on GST implementation and Naresh Trehan Chairman of CIIs National Committee on Healthcare discuss India Inc's expectations from Budget 2012.

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: Is this clearly going to be a make-or-break Budget? What do you think is going to be the one big idea as far as Budget 2012 is concerned?

Godrej: This is going to be an extremely important budget because two things need to be done very strongly - one is to provide some incentives for the economy to grow and secondly, fiscal balance must be maintained. It will need more than just the Budget, to my mind the Finance Minister should work extremely hard to see that the Goods and the Services Tax (GST) is passed during the next financial year, the earlier the better. The earlier it is passed his fiscal position will be better.

The other major thing he needs to do is to ensure disinvestment. Fortunately, the stock markets have recovered, disinvestment could be a very good thing to look at in this Budget, he needs to look at areas where reduction in tax rates could lead to in fact increased collection, there are many such areas, surcharges should be gotten rid of, in certain cases some rates can be reduced and collections could actually increase because it would spur economic growth.

Q: Do you believe that given the fiscal room that he has there is going to be any sort of a reduction in taxes or do you actually believe that we are going to see a hike in taxes especially on items like diesel vehicles, as well as in goods like cigarettes?

Memani: Yes, on diesel vehicles at least by what one reads and what's happening, that it's likely that it may come. Cigarettes are the favourite and come up every year. So I am sure they will not miss n it this year. I am not sure whether they will have room as much to reduce tax rates, but my sense is they would be well advised to preserve and not increase tax rates whether an indirect tax or on the direct tax side.

If they can provide for some incentives especially around investment allowance or something, which may not have an immediate impact, but it will encourage manufacturing, that will be great. I think it's important that they will also need to augment tax revenues. They have to try and see there is a lot of money that's locked in disputes and one of the thrusts could be to see how they can unlock the money that's stuck up in disputes.

Q: Do you anticipate a hike as far as service tax is concerned because that's the big buzz and speculation at this point? Do you expect a hike in service tax?

Memani: No, I don't expect so. If they try and bring in the negative list then I hope there is no hike. If they bring in the negative list which looks quite likely, they will stay away from those areas that are there in the state ambit. Even if you look at the GST, the central rate is around 10%. So, I don't think they will hike it.

Q: The big idea this time around could perhaps be the Food Security Bill. There are question marks and apprehensions on how he is actually going to finance it. He hasn't been able to come up with recedes on the disinvestment front. It is the first planned year of the 12th plan and automatically we will see expenditure going up. Is the food security idea going to be the big ticket scheme this time around you think?

Munjal: I am hoping he will surprise us and do more than just food security. As you are aware the CSO advance estimates came out today and the number they have given for GDP is 6.9%, which by itself is along expected lines. But the worry is agriculture which they have said is likely to be 2.5%. Food security also means additional collection and distribution of food; it's not just a number. So on one hand is the fiscal requirement to be able to fund it, second is the practical requirement of being able to grow and distribute this.

There is a serious amount of work which needs to be done on the agriculture policy both in the states and at the center, whether its getting them to agree to a model APMC Act and there are whole host of issues, land ownership, land transfers around agriculture. There is serious work which has to be done and if we are going to have a bill of this nature, we are going to have to find the resources to fund this as well.

We have no fiscal headroom at present. So, we need to create that fiscal headroom. We will also need to widen the tax base, not just keep the rates where they are or lower them for better compliance. We have no choice but to widen the tax base as well. So, we will have to work on both.

Q: In terms of the reform agenda and from an intent point of view, what do you think the government is going to prioritize and focus on?

Munjal: One of the things which has happened this year is that they have moved the date of the Budget to be post the state elections. Since state elections will be over, he may not make any single big bang announcement, but I think of the number of issues which are pending, he is going to pick up chunks of those and make those as announcements in the Budget. This is why I am hoping for a positive surprise; not just one, but I think we will see more than one announcement come in this Budget.

Q: The healthcare sector had a little bit of a disappointment last year. This time around, what are you anticipating in terms of the social sector focus as far as the government is concerned because clearly it's going to be big on the agenda?

Trehan: It's very clear to everybody that we have huge ground to cover as far as providing healthcare to our citizens is concerned; it's actually dismal right now. So we know that we need to double the healthcare delivery system and make it more affordable at all levels.

So with that in mind, there are three things that we have asked for. One is to be able to stimulate the creation of capacity and that the government provide us infrastructure status. The finance minister had already alluded to this in his speech in Parliament and then said that the finer points or the details will be announced later, but it hasn't happened so far. So we are requesting the finance minister this year again to spell it out clearly so that we know that people will get encouraged to create more capacity which is very surely needed.

Second thing we have asked for is that we should have more doctors and paramedical personnel. Today we are producing anywhere around 25,000 doctors and we need to double it to 50,000. So we actually need to modify the rules of creation for medical schools, other paramedical facilities and funding provided so that in the coming years we can accomplish that which is necessary for us to be able to deliver the healthcare that the nation needs.

Third point is that we want the insurance sector to be pushed forward so that it come up with programs or products which will enhance the Rashtriya Swasthya Bima Yojna (RSBY) Scheme which is already there on the ground for below poverty line people.

We need to enhance that scheme and we need to come up with PPP models which will make it possible to deliver care at that level in rural areas and semi-rural areas. So these are things that are actually pending for a long period. Overall, the budget for healthcare allocation this year, which was Rs 26,000 crore last year, needs to be at least doubled so that we can in coming years make up for all the years that we ignored healthcare to the people.

Q: Since the Budget is after the election, do you believe he is going to have a little more room to perhaps move on things like subsides? Do you believe that we are going to see a decisive move towards cutting down subsides this time around?

Godrej: There won't be a better time for him to do that except for immediately after a major election is over, so I expect a lot of subsidies will be rationalized this budget. As you rightly put, there are certain items on which excise increases like diesel cars or cigarettes is very likely to my mind. Also there are some opportunities to increase import duties in some cases. For example, I know a case in the vegetable oil business where both Indonesia and Malaysia are subsidizing their value added manufacturers. Clearly we need to react to that and that can create for considerable additional revenue.