CII's argument is that lower duty rates will stimulate demand, and this, in turn, will generate tax revenues. But lower duty rates--and correspondingly lower final prices--may not induce a growth in consumption: GDP (income) growth is slowing. Duty reduction could mean deeper trouble for the fisc.

The propensity to save is high, and seems to begetting stronger. Financial savings are burgeoning, looking for investments in attractive instruments. There is a dearth of these for the risk-averse investor, as seen from the surge in bank deposits and small savings. The way out seems to be to boost investment. The consequent income growth will expand consumption demand. (Broadly, the growth of consumption demand matches the GDP growth rate).

CII is on the dot when it asks for a minimum duty on project imports. Zero duty on these has diverted domestic demand to foreign suppliers. CII wants the 4 per cent special additional duty (SAD) to cover the trade and core sectors. Actually, SAD should be replaced and merged with the minimum import duty.

CII should have focussed on the deterrents to domestic investment. It could have come out with a cogent assessment of retarded private investment, identifying the causes and proposing remedies. Instead, CII's wish-list highlights the demand for the restoration of the investment allowance (25 per cent of the cost ofplant and machinery). But consider the concessions in place: amortisation of excise payable on capital goods, reduction in the corporation income tax rate, and nil tax on dividend in the hands of the recipient. Since these came in lieu of investment allowance, the demand for its restoration will be viewed with askance. It would appear CII has put forward every single demand of its constituents before the finance minister.

It thus avoided appearing partisan. So CII has failed to come up with a cogent strategy for industrial revival. A pity.