Industry bodies on Monday referred to as on the government to adopt an aggressive privatisation and asset monetisation policy in FY22 to partly offset a Covid-induced shortfall in tax income at the 1st annual pre-Budget stakeholder consultation meeting chaired by finance minister Nirmala Sitharaman on Monday.
They recommended that the Centre set realistic income and deficit targets for FY22, keep away from excessive off-Budget borrowing and firm up a 3-year road map for fiscal consolidation and financial rebound, factoring in the unprecedented devastation triggered by the pandemic.
The government had budgetted a 3.5% fiscal deficit for FY21 but its projections went haywire due to the pandemic and analysts now anticipate it to soar to 7-8% of GDP this fiscal. Some associations encouraged that the government pare back its stake in state-run banks, barring the major 3-4, to under 50% by means of the industry route more than the subsequent 12 months.
They argued that economic sector reforms are an absolute pre-requisite for turning India into the targetted $5-trillion economy by FY25. Disinvestment of not just loss-producing firms but also a couple of profit-producing ones desires to be undertaken, particularly as the capital markets are performing properly. Simialrly, surplus land with the government can be either sold or leased, below an ambitious monetisation policy, they mentioned.
Last week, financial affairs secratry Tarun Bajaj hinted at an aggressive privatisation policy and mentioned the proposed strategic sector policy, below which a maximum of 4 state-run entities will be permitted in crucial sectors, will be “much more ambitious than anticipated”. All state-run enterprises in other sectors could be sold off in due course.
The Centre had budgetted an ambitious disinvestment target of Rs 2.1 lakh crore for FY21. But no worthwhile disinvestment has taken location so far this fiscal due to the pandemic. The major corporations that have been on the block because final year incorporate BPCL, Air India, Shipping Corporation and Container Corporation. Similarly, its asset monetisation plans haven’t however elicited enthusiatic response.
Participating in Monday’s virtual meeting, 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.”
Apart from Kotak, crucial industrialists, which includes Pawan Munjal (Hero MoroCorp), Kiran Mazumdar Shaw (Biocon) and Sanjiv Bajaj (Bajaj Finserv), are learnt to have attended the stakeholders’ meeting. On Tuesday and Wednesday, Sitharaman will meet economic industry and capital industry players to seek their inputs.
Top finance ministry officials, which includes finance secretary AB Pandey and financial affairs secretary Tarun Bajaj, also, have been portion of the meeting. To finance big projects in vital sectors of the economy, which includes infrastructure, the government need to also set up professionally-managed Development Finance Institutions (DFIs), along the lines of KfW Germany, Brazil Development Bank and Korea Development Bank, the associations mentioned.
This could be completed by infusing sufficient equity capital into Nabard for funding projects in the agriculture and rural sectors, Sidbi for financing MSMEs and IIFCL for financing infrastructure, they mentioned.
Appreciating the transparency in announcing the off-spending budget borrowing numbers in final year’s spending budget, the chambers urged the finance minister to take this initiave forward and also firm up realistic estimation of fees of many schemes.
Given the possible spike in undesirable loans in the aftermath of the Covid-19, some business bodies also recommended that the govenrment facilitate the setting up of undesirable banks by permitting alternate investment funds to acquire undesirable loans. This will also guarantee helthy development in credit.
They also pitched for a steady tax regime. At the exact same time, the sanctity of contracts for government and quasi-government entities, as properly as for state governments, desires to be ensured, they added.
Section 80JJAA of the I-T Act gives for deduction of 30% on emoluments paid to new personnel for 3 years and this is offered up to an emolument of Rs 25,000 per month. Industry body CII has recommended that this cap be raised to Rs 50,000 per month.