Finance minister Pranab Mukherjee, at a pre-budget meeting with India Inc's who's who at the capital on Tuesday, hinted at the continuing with the stimulus for the industrial sector.

He, however, was not in favour of bringing down taxes owing to its effect on fiscal deficit.

In the run up to budget 2011-12, the FM met the industry captains to know their issues and talking points.

Emerging out of a three-hour long meeting, industry leaders told reporters the FM was not convinced of bringing down taxes. Industry bodies ASSOCHAM and FICCI proposed moderation of the corporate tax rate and retaining the excise and services tax at the current level of 10%.

ASSCOCHAM president Dilip Modi said, “We suggested corporate tax be brought down from 30% to 25%.”  FICCI president Rajan Mittal echoed him in the meeting. He told reporters, "We have asked to maintain excise duty at the current level... Let the interest rate not harden up because industry is in investment mode " He too proposed cut in the corporate tax from 30 % to 25 %.

Mukherjee, however, seemed amenable toward continuing the stimulus package for the industry, said Videocon chairman Venugopal Dhoot.

While Modi also proposed PSU banks begin lending to micro finance institutions (MFIs), Mittal made a recommendation for opening up defence and retail sectors for foreign players.

Considering the economy has recorded a growth rate of 8.9 per cent in the first half of the current fiscal, it will be interesting to see the FM’s move as continuing with the stimulus will adversely affect the fiscal deficit. Government had given stimulus to the industry in the wake of economic crisis in 2009 by reducing tax rates and enhancing public expenditure. However, the economy showed signs of robust recovery and the government raised tax rates in the 2010-11 budget.

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Corrective measures to step us industrial production: FM

Finance Minister Pranab Mukherjee on Wednesday said deceleration in industrial growth to 2.7 per cent in November and high inflation could have an adverse impact on the economy and promised to take corrective steps to push up factory output.

"If IIP goes down and inflation goes up, it will have an adverse impact, but I am not coming to any premature conclusion," Mukherjee told reporters here.

"We shall have to look into and take corrective measures so that IIP numbers revive in the remaining four months," he said.

Even though part of the deceleration in growth may be because of high base effect of 11.3 per cent in November last year, the Finance Minister refused to take it as a consolation.

"Last time, if you have noticed that in november last year it(IIP) was very high, so base effect is also there, but that is no consolation," he said.

Inflation is expected to be higher in December than 7.48 per cent in November, since food inflation has surged up to 18.32 per cent during the week ended December 25.

In the previous two weeks also, food inflation was in double digits while standing at 9.46 per cent for the week ended December 4