Noting that the Indian economy has grown rapidly in an environment where other major economies have slowed down, the Confederation of Indian Industry (CII) has offered a few policy suggestions for the Narendra Modi government that it may announce in the upcoming interim Union Budget.
The group has suggested far-ranging measures in different sectors that Finance Minister Nirmala Sitharaman may look into in order to augment further growth in the said sectors, like investment, tax rationalisation, boosting revenues, among other policy suggestions.
India Inc has suggested that the government may balance fiscal consolidation with economic growth and that the fiscal deficit should be reduced to around 5.4 per cent of the GDP in the upcoming financial year. CII in its note also suggested that the goods and services tax (GST) may be moved to a three-rate structure, with a low rate for essentials, standard rate for most goods and a high rate for luxury and demerit goods.
When it comes to the government’s divestment programme, the CII has asked for the process to which investor interest is sought for all PSEs to be privatised and those with higher interest can be prioritised.
Furthering its emphasis on capital expenditure, the CII has asked the government to up budget towards capex by 20 per cent to Rs 12 lakh crore.
To better target subsidies, India Inc has asked for food and fertiliser subsidy to be revised based on updated datasets.
Promotion of low-cost and affordable housing has been sought by extending the interest subvention scheme to cover total housing cost of up to Rs 35 lakh, up from Rs 25 lakh presently.
It has also been suggested to launch a ‘National Mission for Advanced Manufacturing’ for enhancing the quality and productivity in manufacturing while expanding Production-linked Incentive schemes to labour intensive sectors such as apparel, toys, footwear for boosting employment generation, and to sectors with large imports but domestic capability, like capital goods, chemicals, to reduce import dependence.
To help push the ease of doing business in the country, the government has been asked to continue decriminalising business facing laws while strengthening dispute resolution mechanisms. The government could look into reducing logistics’ costs in the country further by ensuring timely implementation of the National Logistics Policy, the CII has suggested.
Promotion of the MSME sectors in the country could be done by the creation of a seperate vertical for micro enterprises in the MSME Ministry.
The CII has called for rationalisation of import tariffs to a three-tier duty structure with raw materials, inputs at zero or low duties, final goods at the standard rate of about 7.5 per cent, and rate for intermediates goods in middle.
The Centre has been asked to move towards increasing the share of research and development’s (R&D) share in the nation’s GDP to 1.25 per cent by 2025 and 2.5 per cent by 2030.
It has been suggested that the government could create a mechanism through which all skill development schemes are linked with schools and colleges, both public and private in order to ensure effective skill development of the populace.
