Confederation of Indian Industry (CII), while presenting its pre-budget memorandum to the Ministry of Finance, outlined a four-point agenda to re-energize growth in the economy. At the outset, CII stressed on the need for revitalizing the investment as well as consumption demand to infuse vibrancy in the economy. For reviving investment, the memorandum recommends raising capital spending to 3.3-3.4% of GDP in FY24 from 2.9% currently with an aim to increase it further to a 3.8-3.9% by FY25. It also suggests increasing outlays on green infrastructure like renewables along with traditional infrastructure like roads, railways, and ports etc. In addition, full implementation of Gati Shakti and NIP should be expedited to bring in efficiency in infrastructure creation.
For financing infrastructure, CII has recommended deepening of corporate bond markets (including infrastructure bonds), prioritizing a package for large play of urban municipal bonds, launching of a Blended Finance Star Multiplier program for sustainability projects with an allocation INR 10,000 crore, among others. Private sector investment also needs a boost as public investment alone is not enough to energize growth in the economy. Private Sector Participation in PPPs should also be revived through timely payments, Swift Dispute Resolution Mechanism & expediting the land acquisition process.
For raising consumption demand, CII has suggested putting in place policies such as rationalizing income tax slabs and rates for individuals, reducing 28% GST rate on select consumer durables, expediting rural infrastructure projects for facilitating employment generation in the hinterland.
On fiscal Consolidation, the second key component critical for revival of growth, CII suggests that a credible road map be drawn up and announced during the budget which would gradually bring down fiscal deficit to 6.0 per cent of GDP in FY24 and to 4.5% by FY26. On revenue generation, CII stressed on meeting the disinvestment target, and to bring pace to PSU privatisation, which would augment revenues in addition to boosting economic efficiency, the responsibility and authority for identified PSUs should be transferred to DIPAM from the line Ministries post the decision to privatise a company. On measures related to expenditure rationalisation, CII emphasised on the need to curtail nonpriority expenditure by rationalizing subsides such as fuel and fertilizers. It is estimated that non-merit subsidies comprise a staggering 5.7 per cent of GDP, of which 1.6 per cent is from the Centre and 4.1 per cent from the states. This is clearly unsustainable.
On encouraging manufacturing and boosting exports, the third and fourth key ingredient pivotal for reviving growth, CII suggested a fillip to ease of doing business through further digitization, faster and time-bound clearance, contract enforcement, alternate dispute redressal mechanism and a genuine single window system encompassing central and state clearances. Tax certainty for businesses should continue and corporate tax rates should be maintained at the current levels. CII has also suggested that no arrests or detention should take place in civil cases unless criminalization in business has been proved beyond doubt.
CII also suggested that the Credit Linked Capital Subsidy Scheme (CLCSS) for technology up-gradation for MSMEs, should be revived and green finance should be provided for funding climate-friendly technology in MSMEs, according to CII. Further, to provide a fillip to exports, CII has recommended a graded roadmap to shift import duty slabs to a competitive level and covering all the export products, including the EOU and SEZ units, under the RoDTEP scheme. The sunset date for commencing manufacture under Section 115BAB of the income tax Act should be extended from current 31 March 2024 till 31 March 2025. This would encourage more investment in manufacturing sector and exports, according to CII.
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