Budget 2017-18 unleashes multiple instruments to revive demand and encourage investments, while also prioritizing the needs of vulnerable sections of society, said the Confederation of Indian Industry (CII).
“The Finance Minister is to be complimented for delivering a prudent and pragmatic Budget that caters to most sectors of the economy,” stated Dr Naushad Forbes, President, CII. “Industry welcomes the cut in personal and corporate income tax rates. The economic reform agenda continues at a rapid pace, with abolishing of FIPB and move for time-bound listing of CPSEs. The Budget focuses on measures to increase transparency with a broad strategy to put in place the mechanisms and institutions for the future of the country, including through digitalization and formalization of the economy.”
The CII President congratulated the Finance Minister for maintaining a check on the fiscal deficit despite the overwhelming need to raise public expenditure to boost growth. The fiscal deficit of 3.5 per cent of GDP for Budget 2016-17 will be lowered to 3.2 per cent for the coming year. At the same time, it is commendable that the Budget reduces the Revenue Deficit to 1.9 per cent of GDP, while increasing capital expenditure by over 25 per cent. “Adherence to the fiscal prudence imperatives will lay the foundation for long term growth and CII appreciates this commitment,” noted Dr Forbes.
The key measure of slashing the corporate income tax for companies with a turnover of less than Rs 50 crores at one go from 30 per centto 25 per cent covering 96 per cent of all companies is greatly welcome, stated the CII President. “This is in line with CII’s recommendation to bring down the corporate income tax rate to build the competitiveness of the Indian economy as per comparator countries.”
It was heartening to note that the GST implementation is on track through strong efforts and commitment of the Finance Ministry and the state governments. CII looks forward to its rollout which will be a key step in the transformation of the economy.
Dr Forbes added that ‘the significant increase in infrastructure investments by 16 per cent to Rs 3.96 lakh crores would create demand for upstream and downstream sectors. It would also generate new employment opportunities, especially through high spending in transport infrastructure pegged at Rs 2.4 lakh crores.’ For the first time, the Railway Budget was merged with the General Budget, opening up the route for a coordinated multi-modal transport strategy for the country.
Railway station development, airports modernization, expansion of airports in Tier-2 cities, and increase in roads expenditure as announced in the Budget will also fast-track the infrastructure mission, said the CII Press release. The step to address dispute resolution in public-private partnerships through amendment in the Arbitration and Conciliation Act is right for both the infrastructure and financial sectors, which have been troubled by stranded projects and consequent non-performing assets. We look forward to seeing the detail of how this will be done.
For promotion of affordable housing, infrastructure status has been granted to the sector among various other measures. In general, the decline in lending rates post-demonetisation should also help revive demand in this sector.
The Budget took major steps for women aimed at building capacities and ensuring their higher participation in the workforce. Additionally, it pledged to continue strong measures for skill development and building the apprenticeship scheme.
“The high importance to credit for farmers and micro-irrigation through a dedicated fund as well emphasis on rural economy will unlock demand in the villages, adding to overall private consumption levels,” noted Dr Forbes.
The CII President also welcomed the move to clean up funding systems for elections. CII had recommended bringing down the cash donation limits and the Budget has curtailed such donations to Rs 2,000. This along with other steps such as the innovative electoral bonds would go a long way towards enhancing transparency in cash transactions.
Dr Forbes appreciated the notable measures for digitalization of the economy through extension of the BHIM app, two more schemes for merchants, and expansion of POS by banks. The Prime Minister had earlier announced cut in presumptive tax rates for traders with turnover of less than Rs 2 crores and this was reiterated in the Budget.
“We would have liked to see lower corporate income tax for all companies, given that large companies contribute significantly to investments and employment. And the additional surcharge on high-income tax payers detracts from the principle of honouring honest tax payers,” added Dr Forbes.