India Inc on Monday urged Finance Minister Nirmala Sitharaman to take development-oriented methods, like a fresh fiscal stimulus, in the subsequent price range to preserve the pace of recovery in the economy, which has gone by way of a rough patch on account of the outbreak of coronavirus pandemic.
In the virtual pre-price range consultation meeting with the minister, the captains of Indian sector recommended lowering direct tax prices for men and women, more incentives for housing sector and rationalisation of GST structure with a view to increase development.
The sector chambers also created a case for accelerating infrastructure investment, privatisation of state-owned firms and higher tax incentives for investigation and improvement activities.
“The economy is recovering at a quick pace and this momentum needs to be sustained. Quick and timely action by the government has led to this turnaround. Next year’s budget must prioritise growth-oriented measures and fiscal considerations should be secondary. The need for further fiscal stimulus remains,” mentioned FICCI in its price range suggestions.
Presenting the recommendations, CII President Uday Kotak mentioned, “Government expenditure should be prioritised in three areas – infrastructure, healthcare and sustainability. The budget proposals should also address two critical areas of boosting private investments and providing support for employment generation.” Emphasising on the urgent need to have for monetary sector reforms, Kotak mentioned reaching the vision of India becoming a USD 5 trillion economy is contingent on getting a powerful monetary sector, and the government must bring down its stake in public sector banks to beneath 50 per cent by way of the market place route more than the subsequent 12 months, except for 3-4 big banks such as State Bank of India, Bank of Baroda and Union Bank.
Government must also generate, government owned, professionally managed Development Finance Institutions (DFIs) to finance important sectors of the economy, on the lines of KfW Germany, Brazil Development Bank (BNDES), and Korea Development Bank.
This could be accomplished by infusing equity in NABARD for financing agriculture and rural sector, SIDBI for financing MSMEs and IIFCL for financing infrastructure, he added.
Making a pitch for moderation in taxes, Assocham recommended prices for men and women might be lowered maintaining in thoughts the lowered corporate tax prices and elevated surcharge on person taxpayers.
Minimum Alternate Tax (MAT) has outlived its utility and creates avoidable disputes and litigation, which might go up considerably on account of transition to IND AS, it mentioned, adding that the tax must be abolished and alternatively the price below section 115JB of the Act must be lowered to 12 per cent.
To market actual estate sector, sector chambers created numerous recommendations, like rising limit for interest deduction paid on residence loan from Rs 2 lakh to Rs 5 lakh and interest subvention on housing loans of 3-4 per cent for a period of 3-4 years.
“Consider making employee’s contribution to EPF voluntary (without making any change in the employer’s contribution). Also consider giving a three-year holiday for ESI contribution to both employers and employees,” Ficci mentioned.
“These will enhance the take home salary for individuals and will be particularly helpful in reducing the gap between gross and net salary for employees at the bottom of the pyramid,” it added.
Utilise a smaller portion of foreign exchange reserves (USD 15 or 20 billion) for setting up a fund and lend to Indian sector at say 6 per cent in rupees for new projects and substantial expansion, and the tenure for these loans must be 8-12 years, the chamber mentioned.
“Pledge PSU shares to RBI and raise resources at low rates, the market value of government shareholding in PSUs will be around Rs 15 lakh. A third of the shared can be pledged to RBI and government can raise Rs 5 lakh crore. This can be a loan at a low rate of interest – repo rate,” it mentioned.
Accelerate planned disinvestment system, the chamber mentioned, adding that privatisation must be in correct spirits guaranteeing capital investment from private sector (domestic or foreign). Given that the tenure of National Anti-Profiteering Authority was initially prescribed for a two-year period and with GST law largely been settled, it is encouraged that determination of costs must be left to the market place forces and the provision of anti-profiteering in the GST law must be discontinued with potential impact, it mentioned.
The lack of recommendations on the topic is just adding to ambiguity in implementation of anti-profiteering provision by the sector, it mentioned.
CII recommended stronger function for Financial Stability and Development Council (FSDC) to make sure seamless coordination amongst regulators for defending the interests of depositors and smaller investors.
It encouraged not to contain any substantial deductions/exemptions, but concentrate on higher clarity in law, simplification of procedures and reduction of litigation and extend ‘Vivad se Vishwas’ Scheme.