India Inc on Monday urged Finance Minister Nirmala Sitharaman to take growth-oriented steps, including a fresh fiscal stimulus, in the next budget to maintain the pace of recovery in the economy, which has gone through a rough patch on account of the outbreak of coronavirus pandemic.
In the virtual pre-budget consultation meeting with the minister, the captains of Indian industry suggested lowering direct tax rates for individuals, more incentives for housing sector and rationalisation of GST structure with a view to boost growth. The industry chambers also made a case for accelerating infrastructure investment, privatisation of state-owned companies and greater tax incentives for research and development 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," said FICCI in its budget recommendations.
Presenting the suggestions, CII President Uday Kotak said, "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 for financial sector reforms, Kotak said achieving the vision of India being a USD 5 trillion economy is contingent on having a strong financial sector, and the government should bring down its stake in public sector banks to below 50 per cent through the market route over the next 12 months, except for 3-4 large banks such as State Bank of India, Bank of Baroda and Union Bank.
Government should also create, government owned, professionally managed Development Finance Institutions (DFIs) to finance key sectors of the economy, on the lines of KfW Germany, Brazil Development Bank (BNDES), and Korea Development Bank. This could be achieved 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 suggested rates for individuals may be reduced keeping in mind the reduced corporate tax rates and increased surcharge on individual taxpayers.
Minimum Alternate Tax (MAT) has outlived its utility and creates avoidable disputes and litigation, which may go up significantly on account of transition to IND AS, it said, adding that the tax should be abolished and alternatively the rate under section 115JB of the Act should be reduced to 12 per cent.
