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Informist, Thursday, Nov. 7, 2024

NEW DELHI – In a pre-Budget consultation meeting with the finance ministry, the Confederation of Indian Industry has called for a continued push on capital expenditure, tax reforms, fiscal consolidation, and disinvestment of public sector companies, among other things. The government usually presents the Union Budget on Feb 1.

CII has asked the government to increase capital expenditure by 25% in 2025-26 (Apr-Mar) over the INR 11.11 trillion budgeted for FY25. The government should focus on infrastructure related to rural areas, agriculture, and the social sector, the CII delegation, led by its President Sanjiv Puri, said. The Centre should also consider increasing the allocation to states for capital spending through the scheme for Special Assistance to States for Capital Expenditure in the form of 50-year interest-free loans, with the additional amount being linked to milestone-based next generation of reforms, CII said.

While increasing the Budget allocation for capital expenditure, the Centre should adhere to its goal of lowering the fiscal deficit to below 4.5% of GDP in FY26, CII said. The government should also meet its fiscal deficit target of 4.9% of GDP for FY25. Further, the central government should lay out a glide path to lower its debt to below 50% of GDP by FY31 and to below 40% of GDP, as suggested by the Fiscal Responsibility and Budget Management Act Review Committee in 2017, CII said.

The government should also look to increase its revenues by selling stakes in state-owned companies gradually, CII said. "The government should take advantage of the current boom in the stock market to bring down its stake in PSEs (public sector enterprises) to 51%, so that it retains its position as the single largest owner of the PSE," the CII said in its pre-Budget consultation note. The Department of Investment and Public Asset Management should formulate a five-year road map for disinvesting government's stake with well-defined targets for each year, the industry body said.

CII also suggested further reforming the Goods and Services Tax regime by introducing GST 2.0, which would entail moving to a three-rate structure of low rate for essentials, standard rate for most goods, and higher rate for luxury and demerit goods only. "The scope for GST should also be widened by bringing power, petroleum products and ATF (aviation turbine fuel) under the ambit of GST regime, as non-inclusion has resulted in increasing cost for industry," CII said.

The industry body asked the finance ministry to consider taxing interest income on bank deposits at a lower rate for all income tax slabs, to bring interest income at a comparable tax rate to other instruments such as mutual funds and equities. This would incentivise deposit growth and promote savings in the economy, CII said.

To facilitate recovery in demand at the lower end of the consumption strata, CII suggested increasing the minimum wage rate under the Mahatma Gandhi National Rural Employment Guarantee Act.  End

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

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